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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, 2021

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 November 1, 2021, there were 122,572,462 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, 2021

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

 

39

Item 4.

 

Controls and Procedures

 

39

PART II. OTHER INFORMATION

 

40

Item 1.

 

Legal Proceedings

 

40

Item 1A.

 

Risk Factors

 

40

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

41

Item 6.

 

Exhibits

 

42

SIGNATURES

 

43

 

 

 

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, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

214,179

 

 

$

531,104

 

Restricted cash

 

 

2,141

 

 

 

6,361

 

Accounts receivable, net of allowance of $30,022 and $31,596 as of

   September 30, 2021 and December 31, 2020, respectively

 

 

340,924

 

 

 

347,355

 

Contract assets, net of allowance of $1,068 as of September 30, 2021 and December 31, 2020

 

 

123,244

 

 

 

106,717

 

Income tax receivable

 

 

0

 

 

 

25,421

 

Prepaid expenses and other current assets

 

 

124,473

 

 

 

136,264

 

Total current assets

 

 

804,961

 

 

 

1,153,222

 

Fixed assets, net

 

 

53,667

 

 

 

72,162

 

Software development costs, net

 

 

176,721

 

 

 

193,202

 

Intangible assets, net

 

 

248,408

 

 

 

286,602

 

Goodwill

 

 

974,427

 

 

 

974,729

 

Deferred taxes, net

 

 

6,118

 

 

 

5,790

 

Contract assets - long-term, net of allowance of $4,273 as of September 30, 2021 and December 31, 2020

 

 

51,119

 

 

 

43,682

 

Right-of-use assets - operating leases

 

 

70,297

 

 

 

96,601

 

Other assets

 

 

98,588

 

 

 

91,628

 

Total assets

 

$

2,484,306

 

 

$

2,917,618

 

 

 

 

 

 

 

 

 

 

 

 

 


3


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)

 

September 30, 2021

 

 

December 31, 2020

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

21,801

 

 

$

35,905

 

Accrued expenses

 

 

93,546

 

 

 

100,262

 

Accrued compensation and benefits

 

 

92,737

 

 

 

118,771

 

Deferred revenue

 

 

337,884

 

 

 

334,764

 

Current operating lease liabilities

 

 

19,264

 

 

 

22,264

 

Current liabilities attributable to discontinued operations

 

 

1,708

 

 

 

322,811

 

Total current liabilities

 

 

566,940

 

 

 

934,777

 

Long-term debt

 

 

373,187

 

 

 

167,587

 

Deferred revenue

 

 

4,538

 

 

 

3,471

 

Deferred taxes, net

 

 

16,494

 

 

 

18,186

 

Long-term operating lease liabilities

 

 

67,057

 

 

 

93,463

 

Other liabilities

 

 

37,503

 

 

 

33,891

 

Total liabilities

 

 

1,065,719

 

 

 

1,251,375

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

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

   no shares issued and outstanding as of September 30, 2021 and December 31, 2020

 

 

0

 

 

 

0

 

Common stock: $0.01 par value, 349,000 shares authorized as of September 30, 2021

   and December 31, 2020; 276,697 and 122,570 shares issued and outstanding

   as of September 30, 2021, respectively; 274,558 and 139,942 shares issued

   and outstanding as of December 31, 2020, respectively

 

 

2,766

 

 

 

2,745

 

Treasury stock: at cost, 154,126 and 134,616 shares as of September 30, 2021 and

   December 31, 2020, respectively

 

 

(1,213,315

)

 

 

(870,558

)

Additional paid-in capital

 

 

1,952,097

 

 

 

1,902,776

 

Retained earnings

 

 

680,281

 

 

 

633,118

 

Accumulated other comprehensive loss

 

 

(3,242

)

 

 

(1,838

)

Total stockholders’ equity

 

 

1,418,587

 

 

 

1,666,243

 

Total liabilities and stockholders’ equity

 

$

2,484,306

 

 

$

2,917,618

 

 

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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

$

222,726

 

 

$

219,850

 

 

$

670,840

 

 

$

680,124

 

 

Client services

 

 

146,546

 

 

 

145,768

 

 

 

440,498

 

 

 

436,162

 

 

Total revenue

 

 

369,272

 

 

 

365,618

 

 

 

1,111,338

 

 

 

1,116,286

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

 

68,462

 

 

 

72,411

 

 

 

208,496

 

 

 

216,625

 

 

Client services

 

 

122,142

 

 

 

127,361

 

 

 

362,826

 

 

 

406,752

 

 

Amortization of software development and

    acquisition-related assets

 

 

29,894

 

 

 

30,708

 

 

 

89,444

 

 

 

88,237

 

 

Total cost of revenue

 

 

220,498

 

 

 

230,480

 

 

 

660,766

 

 

 

711,614

 

 

    Gross profit

 

 

148,774

 

 

 

135,138

 

 

 

450,572

 

 

 

404,672

 

 

Selling, general and administrative expenses

 

 

78,794

 

 

 

93,442

 

 

 

239,592

 

 

 

296,164

 

 

Research and development

 

 

45,540

 

 

 

46,352

 

 

 

145,932

 

 

 

151,774

 

 

Asset impairment charges

 

 

6,519

 

 

 

210

 

 

 

11,763

 

 

 

210

 

 

Amortization of intangible and acquisition-related assets

 

 

5,817

 

 

 

6,295

 

 

 

17,466

 

 

 

19,326

 

 

Income (loss) from operations

 

 

12,104

 

 

 

(11,161

)

 

 

35,819

 

 

 

(62,802

)

 

Interest expense

 

 

(3,617

)

 

 

(6,667

)

 

 

(9,709

)

 

 

(27,646

)

 

Other income, net

 

 

4,700

 

 

 

398

 

 

 

22,494

 

 

 

45

 

 

Gain on sale of businesses, net

 

 

8,363

 

 

 

0

 

 

 

8,363

 

 

 

0

 

 

Impairment of long-term investments

 

 

0

 

 

 

(1,025

)

 

 

0

 

 

 

(1,575

)

 

Equity in net (loss) income of unconsolidated investments

 

 

(257

)

 

 

383

 

 

 

(321

)

 

 

17,417

 

 

Income (loss) from continuing operations before income taxes

 

 

21,293

 

 

 

(18,072

)

 

 

56,646

 

 

 

(74,561

)

 

Income tax (provision) benefit

 

 

(5,099

)

 

 

4,116

 

 

 

(9,954

)

 

 

6,641

 

 

Income (loss) from continuing operations, net of tax

 

 

16,194

 

 

 

(13,956

)

 

 

46,692

 

 

 

(67,920

)

 

(Loss) income from discontinued operations

 

 

(14

)

 

 

19,545

 

 

 

(7

)

 

 

54,601

 

 

Gain on sale of discontinued operations

 

 

0

 

 

 

0

 

 

 

647

 

 

 

0

 

 

Income tax effect on discontinued operations

 

 

0

 

 

 

(5,047

)

 

 

(169

)

 

 

(14,098

)

 

(Loss) income from discontinued operations, net of tax

 

 

(14

)

 

 

14,498

 

 

 

471

 

 

 

40,503

 

 

Net income (loss)

 

$

16,180

 

 

$

542

 

 

$

47,163

 

 

$

(27,417

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.13

 

 

$

(0.09

)

 

$

0.35

 

 

$

(0.42

)

 

Discontinued operations

 

 

0.00

 

 

 

0.09

 

 

 

0.00

 

 

 

0.25

 

 

Net income (loss) per share - Basic

 

$

0.13

 

 

$

0.00

 

 

$

0.35

 

 

$

(0.17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.12

 

 

$

(0.09

)

 

$

0.33

 

 

$

(0.42

)

 

Discontinued operations

 

 

0.00

 

 

 

0.09

 

 

 

0.00

 

 

 

0.25

 

 

Net income (loss) per share - Diluted

 

$

0.12

 

 

$

0.00

 

 

$

0.33

 

 

$

(0.17

)

 

 

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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Net income (loss)

 

$

16,180

 

 

$

542

 

 

$

47,163

 

 

$

(27,417

)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(805

)

 

 

983

 

 

 

(285

)

 

 

(611

)

 

Change in fair value of derivatives qualifying as cash flow hedges

 

 

0

 

 

 

1,009

 

 

 

(1,509

)

 

 

1,620

 

 

Other comprehensive (loss) income before income tax benefit

 

 

(805

)

 

 

1,992

 

 

 

(1,794

)

 

 

1,009

 

 

Income tax benefit related to items in other comprehensive income (loss)

 

 

0

 

 

 

(260

)

 

 

390

 

 

 

(418

)

 

Total other comprehensive income (loss)

 

 

(805

)

 

 

1,732

 

 

 

(1,404

)

 

 

591

 

 

Comprehensive income (loss)

 

$

15,375

 

 

$

2,274

 

 

$

45,759

 

 

$

(26,826

)

 

 

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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

276,668

 

 

 

274,463

 

 

 

274,558

 

 

 

272,609

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

29

 

 

 

8

 

 

 

2,139

 

 

 

1,862

 

Balance at end of period

 

 

276,697

 

 

 

274,471

 

 

 

276,697

 

 

 

274,471

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,766

 

 

$

2,743

 

 

$

2,745

 

 

$

2,725

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

0

 

 

 

1

 

 

 

21

 

 

 

19

 

Balance at end of period

 

$

2,766

 

 

$

2,744

 

 

$

2,766

 

 

$

2,744

 

Number of treasury stock shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(151,657

)

 

 

(111,493

)

 

 

(134,616

)

 

 

(110,134

)

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

33

 

 

 

90

 

Purchase of treasury stock

 

 

0

 

 

 

(5,000

)

 

 

(6,397

)

 

 

(6,449

)

Accelerated share repurchase program

 

 

(2,469

)

 

 

0

 

 

 

(13,146

)

 

 

0

 

Balance at end of period

 

 

(154,126

)

 

 

(116,493

)

 

 

(154,126

)

 

 

(116,493

)

Treasury stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(1,174,498

)

 

$

(579,678

)

 

$

(870,558

)

 

$

(571,157

)

Issuance of treasury stock

 

 

0

 

 

 

0

 

 

 

465

 

 

 

1,193

 

Purchase of treasury stock

 

 

0

 

 

 

(45,568

)

 

 

(108,953

)

 

 

(55,282

)

Accelerated share repurchase program

 

 

(38,817

)

 

 

0

 

 

 

(234,269

)

 

 

0

 

Balance at end of period

 

$

(1,213,315

)

 

$

(625,246

)

 

$

(1,213,315

)

 

$

(625,246

)

Additional paid-in capital