Allscripts Healthcare Solutions, Inc. (MDRX) on Q1 2021 Results - Earnings Call Transcript

Operator: Greetings, and welcome to Allscripts' 2021 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Shulstein, Vice President of Investor Relations. Thank you. You may begin. Stephen Shulstein: Thank you very much. Good afternoon welcome to the Allscripts' first quarter 2021 earnings conference call. Our speakers today are Paul Black, Allscripts' Chief Executive Officer; and Rick Poulton, our President and Chief Financial Officer. We'll be making a number of forward-looking statements during the presentation and the Q&A part of the call. These statements are based on current expectations and involve a number of risks and uncertainties that can cause our actual results to vary materially. Paul Black: Thanks, Stephen. And thanks everyone for joining the call. We appreciate your interest in Allscripts. Let me begin by saying that I'm very pleased with our solid first quarter results. These results reflect the hard work and tough decisions we made last year and continue to make the position the company for long-term success. Looking back a year ago, it's gratifying to see the dramatic transformation Allscripts has made improving our financial performance, we adjusted our priorities to help clients respond to the COVID pandemic, and we optimized our balance sheet and solutions portfolio. I like to once again thank our associates for their unceasing devotion to our clients and for delivering these results. While the COVID pandemic has not ended, we are becoming more optimistic given the trend lines for decreases in COVID infections in North America, increases in the percentage of population who have been vaccinated, and the efficacy of vaccines impacts on preventing COVID severe outcomes. We also believe the pandemic highlighted the significant value that health IT solutions and data bring across the continuum of care. We are proud of the actions we took and our taking to lead our clients and positioning them and us to succeed post pandemic. When the pandemic became known to the medical community, Allscripts immediately set up a team to respond to the crisis by ensuring our solutions were updated with the necessary alerts to quickly identify risk populations. We were recognized by Reaction Data as having outperformed our competitors in the delivery of new functionality and services to support provider organizations throughout the pandemic. Throughout the early months, we continue to assist our clients and their recovery from the crisis. During that time, many healthcare organizations saw a reduction in elective procedures and challenges to their financial position. Once again, Allscripts were there to help our clients recover by offering full telemedicine solutions, workforce management tools, and more access data to help them make better decisions for the business. Now as we enter into the recovery phase of the pandemic, Allscripts equally prepared to help consumers and our clients protect themselves and their organizations from future crises with open access to data in analytics, telemedicine and cloud enabled services. From the beginning and throughout the pandemic, Allscripts has been a trusted partner to our clients. Rick Poulton: Okay, thanks Paul. And thanks everybody for joining us today. One more reminder, as Stephen indicated, additional financial details are available in the supplemental financial data workbook that's posted to our Investor Relations website. So we were very pleased with our start to 2021. Overall bookings and revenue performance were in line with our plan. And our continued discipline on our cost structure created significant operating leverage, resulting in adjusted EBITDA, EPS and free cash flow, all coming in above our expectations for the first quarter. This is the cleanest quarter of financial reporting that we have had in years. And I think the numbers really speak for themselves as they reflect the performance trend that we've now seen for several quarters. So my prepared comments will be shorter than usual. So with that overview, let me highlight a few items starting with our bookings performance. We generated $194 million of new bookings in the quarter, which was up 6% year-over-year, and 7% sequentially, in what is typically a seasonally weak bookings quarter. First quarter result was higher than we have reported in any quarter of 2020 on a like for like basis. This reflects a continued modest improvement in the overall sales environment as our clients continue to recover from the pandemic and turn their focus to improving their operations and optimizing their health care IT environment. As Paul mentioned, our particular strength in our Sunrise franchise with four new hospitals in the quarter, and our ambulatory business continued its momentum with six new competitive business wins in the quarter as well. As Paul discussed around Veradigm, our business there saw some very good deal flow across its solution set, including provider, life science and payer clients. These partners continue to recognize the unique value proposition we bring with our differentiated data and analytics platform, along with the bidirectional connection to the provider and patient point of care. Turning to our margin performance in quarter, consolidated non-GAAP gross margin was 43.1%, which was up 480 basis points year-over-year. This improvement reflects the dramatic turnaround in our client services organization over the past year; as we right size the cost structure in that business to reflect the current revenue environment as well enhance the productivity of this lever base. As a result, Client services margin was 19.8% in the first quarter, which was up more than 1,600 basis points on a year-over-year basis. That strong gross margin performance along with our cost discipline around R&D and SG&A costs resulted in a consolidated adjusted EBITDA margin of 18.3%, which was up 860 basis points on a year-over-year basis. This reflects $31 million, or 83% growth in year-over-year adjusted EBITDA compared with the first quarter of 2020. As a result of our strong margin performance, along with the benefit from a lower share count, we reported first quarter GAAP diluted EPS of $0.19 a share, which is up from $0.02 a share that we -- in the first quarter of 2020. Operator: Our first question comes from the line of Charles Rhyee with Cowen. UnidentifiedAnalyst: Hi, this is James on for Charles. Obviously virtual cares playing a greater role in care delivery. Can you talk about what Allscripts is doing to enable virtual care? RickPoulton: Yes, we've actually been talking about this for a few quarters now. We rolled out very quickly last year telehealth capabilities to our clients. And we've gotten pretty significant pick up on it with our clients on that. So that's contributed to our revenue but also it's been a big win for our clients as they've been able to maintain their relationship with their patients. Paul went through a lot of other items that we were doing to try to assist patient assist our -- during the pandemic and help them work remotely with their clients. But I think telehealth tele visits is probably at the top of the pyramid. UnidentifiedAnalyst: And also, can you talk about your capital deployment priorities given the strong cash position following that the divestures of EPSi and Care Points, also how much capacities available under the current share repurchase program and any plans for additional authorizations in the future? RickPoulton: Yes, so let me pick those two questions, two part question there. Our priorities are, we want to continue to make smart investments in the business, we'll do that we've been -- that we continue to maintain our R&D at a pretty high level. And we will look to continue to add to our capabilities as we need as we see fit. But we also I think have been pretty transparent about the fact that we think our shares have been dramatically undervalued. And so we have been focused on returning cash to shareholders. We've detailed that over several quarters now, we're about to end, or coming to an end next week of accelerated share repurchase program that we put in place in Q4. As we do that, we will have used up about two thirds of the authorization that we just got in last November. But we still have some remaining authorization close to $100 million of authorization left. And we will continue to monitor our stock price and do that and make incremental decisions from here. But our plan is to; we're quite comfortable with no net debt, as you heard me say we, in fact, have net cash position right now. So we have tremendous capacity to continue to return cash to shareholders. Operator: Our next question comes from the line of Michael Cherny with Bank of America. MichaelCherny: Afternoon and really nice job across the board on the quarter. Congratulations. I was thinking a little bit, it's been, I believe, please correct me on timing. But close to a year, since you first engaged with the consulting firm to start working on your operational dynamics, it's showing up very nicely in the margins. Could you just give us a sense of what comes next from here, where you're focused on the next leg of opportunity, and how much of what we should expect on ongoing margin expansion will be further business improvement in some operational dynamics versus some of the mix components that come with the growth in particular on the data and analytics side? RickPoulton: Yes. So thanks Mike, for the comments and the question. I guess you have a few questions within that. So yes, first off, yes, it was about a year ago that we brought in some assistance from the outside to help us very rapidly scale our cost structure back to where it belongs. And I'm happy with the results of that. We published long term margin targets, early in that process. And we haven't forgotten about those, we haven't deviated from them, other than the fact that of course, with some of the portfolio changes, we needed to of course, refresh the margin for that. And that's what I've done with this call. But we're still holding our -- to a high standard. I think, in our core clinical and financial solution segment we will continue to really focus on efficiency on the cost side, but also look for opportunities to grow. And so we all know, it's not a high growth market, but there are pockets to grow into, and there is still a replacement market that we believe will be a net winner in. So some of the examples Paul and crew on the inpatient side with our Sunrise platform. And as I said, we continue to log wounds in our ambulatory side makes us feel good that we have the right solution, the other competitive as our replacement market comes up. So, it'll be a focus on costs, but also picking off some replacement wins as well. And then, of course there are use cases that continue to evolve with that client base too. And revenue cycle services are a big area, in particular in the outpatient space with nice list there from our client base, and it's providing some good growth for us. The first question today about telehealth and some of the Remote Patient tools that our clients are looking for, it gives us an opportunity to provide solutions there. So it's a combination of all of that will help the core clinical group continue its march towards its long term goals, but as you started in your question we've made significant improvement already. And I think we'll continue to drive a drumbeat of change. But we've made a lot of progress. And I think we're not going to see step function changes here, we're just going to see continuous improvement. On the data analytics side. As I said we're expecting nice growth for the back half of the year, the left next three quarters of the year, I should say. And that's going to do a lot for margins. So that's we're going to be smart about our costs there. But it's an area that ultimately we'll be investing in to support growth, but we'll get some nice operating leverage off that growth. So let me pause there Mike, I don't know if I got all your questions or if I still left something out. MichaelCherny: You did Rick, I ranted probably it's longer than needed. So I'll ask one more separate question that's much more quick and direct. Given where Veradigm in its growth profile, how do you see it shaping out in the various different competitive dynamics of the market? Since it does seem to be an area where other companies, both traditional competitors, and others are trying to expand as well? RickPoulton: Yes, well, look imitation is the sincerest form of flattery, right. So we see that from other folks. The good news is we're not just talking about it; we have a real platform, real client relationships over multiple years, and a real distribution network there. So I feel good about our competitive positioning, I also think we have a unique set of data assets, that are not only assets we own, but we also have, some of our competitors have asked us to help them with their assets. So it's a unique asset base that is extremely difficult, if not impossible to replicate. So we feel good about the position. And I think, as I said when we look out for the balance of this year, we're expecting the growth engine; start to yield some nice results there. So things feel good on that side of the business. Operator: Our next question comes from the line of Sean Dodge with RBC Capital Markets. SeanDodge: Thanks. Good afternoon. Rick, your comments earlier on opportunities in the replacement market, I'd imagined the pandemic probably sidelined a lot of those decision processes. Are you seeing any kind of change in activity levels there now? I guess, anything either just the fact that being kind of, hopefully post pandemic now, are there anything kind of regulatory or otherwise that are kind of percolating here and helping them maybe catalyze some activity? RickPoulton: Yes, I may start and I'm going to ask Paul to feeds on because Paul spends a lot more time in front of the clients than I do. But I'd remind you that we actually had some nice wins last year on our ambulatory side. So even though with the depth of the pandemic, we did see a lot of replacement market activity on the ambulatory side last year, and we were very happy with how we fared there. But I think on the inpatient side, it was a pretty slow year in 2020. So almost by definition, 2021 will be a better year than 2020 we think in terms of opportunities. And I think that's especially true internationally. Those tend to be more public sector deals. And I think public sector all that shut down last year, for obvious reasons. And we're starting to see some momentum creep back into those discussions. So let me ask Paul, to add to that. PaulBlack: Yes, there's a -- our pipeline on the hospital side is as good as it's been for new business for the last three or four years. So there's a lot of activity interestingly, and that's because of the teams we have, it's been going after it but also getting better at being in front of the opportunities that exists with consultants and just by he will right in the payment very hard, to extent, we had a very good Q1 and we have other things that are keyed up, they're all competitive. So sometimes, those results are more lumpy. With respect of the outside the United States has some pretty good sized things that , last year, there was a big diversion at the Ministry of Health level to take care of the populations much more so than it was to go replace electronic medical records. And so that did, in fact, slow down. But I wouldn't say that the US slowdown as Rick also said accurately, the new business in the ambulatory side of the marketplace was very robust last year, and we had a pretty good Q1. The existing clients are also expanding. So there are a number of organizations that are raising their hand and asking to be to be acquired. And that's how we're getting some of those results that we talked about today. But also some of the other relationships we had last year and expand into additional hospitals that they acquired and additional physician clinic that they bought. And that always bodes well for us when that happens when our clients buy more. And that's -- those are the other AP will highlight that. The thing that this is different today I talked on it a bit is that we have a breadth and depth and a suite of offerings allow somebody to come in and do a bit more of a one stop shop, not only on inpatient outpatient revenue cycle, but also for revenue cycle outsourcing services, for total out IT outsourcing services. And for some of the consulting fees that are usually reserved for perhaps organization that may have a history and specifically only doing that. We're seeing clients come to us for value added services, and for many of the things that they may not have historically outsourced to somebody like us, and we're seeing that as well. Some of that, I think does from the pandemic, where those organizations actually sent those people home. And like a lot of the people that were working, if you will, in the back office, and they're noticing that freed up space inside the hospital, and they're actually interested in perhaps looking at somebody else to take that function over for them, given that they've already if you will move it out of the four walls of the hospital or four walls from the clinic. So that's another interesting dynamic, I think that's come out of the pandemic, that we will certainly try to work on aggressively with our clients. SeanDodge: Okay, yes, that's very helpful, thank you. And then maybe on the rollout of the new Sunrise platform, how long you expect it will take the majority of your kind of client base upgraded, transitioned over and then the choice they have to migrate to the Microsoft hosting, can you walk through maybe how that changes, the costs or economics for them, and is that a decision you expect most that migrate will make? PaulBlack: I think that as you bifurcate the marketing into new business versus those that are already clients of ours that are already hosted in one of our data centers, versus the third option of people that are on- premise, like the on-premise folks they are going to be very interested in this, especially when they think about the things I talked about earlier, around cyber, around continuous operations, and around some of the capabilities that come native in the cloud, around texting and voice recognition, the ambient technologies that you read about Microsoft doing, not only with their acquisition of Nuance, but even before that the capabilities that come native inside the cloud, are pretty interesting to people, especially as folks are trying to get to more of a keyboard less experience for the physicians, when you think about the broader topic of physician fatigue. So those are all things that help drive us and towards that, but we do new business, our new business, almost exclusively cloud based. So that's number one. The people that are in on-prem are going to move over a period of time, I'd say next 18 to 24 months, some people are already moving, and then other folks that are already hosted depending upon what their contract looks like, with us will host over the course of the next I would say three to five years. Operator: Our next question comes from the line of Jeff Garro with Piper Sandler. JeffGarro: Yes, good afternoon, and thanks for taking the questions and congrats on the quarter. I want to ask about bookings. And John's question was a nice segue here, I was hoping that you could comment on the mix of bookings between recurring revenue and nonrecurring in the quarter and particularly in the light of what sounded like a very good Sunrise quarter. And then knowing how that product is evolving with a Microsoft relationship that you just referenced. PaulBlack: Well, let me start by its, we don't typically report as you know bookings on a recurring versus nonrecurring basis, we don't really categorize it that way. But I guess what I can say is this, there's nothing about the quarter that I think fundamentally changes the mix we have said. So we're 80-ish percent recurring 20% nonrecurring, nonrecurring again is primarily made up of our project a services, software licenses to extent some people still buy them on a on a perpetual license upfront basis as opposed to through a subscription. Sometimes we have some hardware sales, but those tend to be the things that are the nonrecurring aspects. And there's nothing about the composition of first quarter that in my view, fundamentally changes that. Okay, so that's on that part, I think the contribution to get it all the way to the full $494 million that we reported of bookings, yes, Sunrise had a good quarter, the new deal with Mercy was an ideal, as was both a Blessing and the Northwell Hospital extensions. But we have the other big areas of the company. So the ambulatory franchise and also Veradigm were also significant contributors to the overall bookings mix. So there was nothing unusually skewed in my view about their bookings performance for first quarter, on any area of the company. JeffGarro: Thank you. That's so helpful. PaulBlack: That may not answer your question, Jeff. But I just -- let's start with that backdrop, and then see what else you want to ask us. JeffGarro: Very helpful color, I wasn't expecting specific percentages, but maybe a little bit more commentary on what a Sunrise deal looks like today in terms of recurring versus nonrecurring, and if the Microsoft relationship changes how something like a Mercy deal hits bookings, and then translates to the P&L. RickPoulton: So a new logo relationship Mercy is typically structured as either a seven to 10 year deal. Most of the structure of the deal everything is bundled in a kind of a single subscription price. So that is largely, there's a little bit of initial implementation services. So there was some nonrecurring revenue that goes with it, but it's, they're largely -- they actually probably looked a lot like what our long-term averages now is at 20 when you break it all down, so nothing unusual about that deal. And nothing really changes what we look like today, because of that deal. They -- it's structured all is recurring revenue, once you get past the initial implementation fees. The deals where it's additional hospital with a client that's already in place, that could be different based on how our relationship is with clients. So some clients are long term clients who started on perpetual licenses. And when they need a few more licenses for a new facility that tends to be the same, they'll follow the same structure of the deal that they already have. Others started as a subscription model, and they'll just look to add on top of that subscription. So it tends to follow what the client was like, Jeff, and so nothing is beyond that generalization it's hard to say, and it's very client specific, what the structure of the deal would look like. JeffGarro: Got it, very helpful. One last one for me, I wanted to ask about the ambulatory market and the comment around consolidate vendors. Just curious what types of organizations are pursuing consolidation of vendors now, and how your portfolio that segments for different parts of the markets might help you address those consolidation efforts. PaulBlack: I think some of the consolidation I was referring to was, are things that we brought to them. And specifically during the pandemic right, we're saying that their clinic visits are going down. They were saying, and perhaps they were unable to see patients a full year ago, they actually had some financial pressures. And so they were talking to us about some of their roles, we talked to them about the number of different relationships that they had. And it might be more cost effective. And it turned out to be more cost effective to put more of those relationships into one Iris bucket, if you will, and that was us. So as we have a broad breadth and depth of offerings, we wouldn't that, look at their accounts payable, and work with them to try to figure out if we could consolidate many more pieces of business that we didn't currently have, or larger, if you will, percent of their spend coming to us versus in some cases 20 or 30 other players and that was a way for them to become more efficient and achieve their goal which is overall reduce their IT spend a bit and that benefited us because that percent that we continue to spend actually increased our share. Operator: Our next question comes from the line of Eric Percher with Nephron Research. EricPercher: Thank you and Rick appreciate what you termed it a clean quarter. Two quick clarifying questions and then one for Paul on the clarifications. So cap software at $18.1 million is that about right size relative to percent of revenue or absolute level. And then I want to make sure I understood the debt comment, which I think was that there's $60 million of net cash without stating what the cash or debt level was. So just wanted to clarify those two. PaulBlack: Yes. Thanks Eric. Yes. So on the second question, yes. I mean, that was the, in an effort to make sure everybody understood the cash position, I'm, it's a net of $60 million if you pro forma the tax settlement that we did in early April. And then you just compare that as you know the convertible bonds that we have outstanding, don't show up on the balance sheet at face value. They accrete upward over time. So cut through all that noise for just anybody who is a little less familiar with it, I want to make sure everybody understood if you just compare net cash to face value of the bonds, you're in a net $60 million cash position. Makes sense? EricPercher: And, yes, and cap software. RickPoulton: Okay. So, you were a little hard to hear. So I'm not sure. Let me just make sure I understand what your question was. So $82.1 million was the amount of spend this quarter that we capitalized, right. So -- the gross of $67 million, right? And that -- I'm not and that's where I think I lost a little bit on what your question was, but as a -- so you may have to repeat it, but the capitalization rate. EricPercher: Yes, that's where I was going. PaulBlack: Okay, so the cap rate, I've been talking about that for a few quarters, we've been trying to drive the capitalization rate down, and not continue to just build up costs on the balance sheet. So for three quarters, now, we've been amortizing more to income than we've been capitalizing, so I feel good that the quality of the earnings continues to get better and better, should that trend should continue. The rate, we were at 30%, in Q3 dropped to 23% in Q4 went to 27% this quarter that's around the edges, you're going to see a little bit of movement on the percent just because of the accounting rules intersecting with what our gross fund is during the quarter. So you'll get a little bit of bubbling out, but, I definitely expect that number to sit in the 20s and not go back up to where we had gotten to, which was almost like the mid-30s. EricPercher: Okay, that's always going one for improvement. And then, Paul, on the topic of Microsoft, it was like they are everywhere of late. And I think beyond Nuance and acts of this last week, seeing alignments with health systems and even biopharma manufacturers. When you see that expansion, it doesn't appear to you like to us that they're expanding faster or broader than maybe it was expected a year or two ago. And do you think there are opportunities that extend beyond some of the core that we've talked about? And as we think about the Veradigm, are there opportunities that you get excited about relative to the moves that they seem to be making. PaulBlack: The appearance and the reality, what's going on Microsoft, in my opinion, are that they are absolutely getting into healthcare in a very big way, they will continue to be an enterprise software player, they'll continue to have, if you will, an operating system that resides inside of their cloud. This, I think, is an interesting distinction between them and perhaps some of the other people that are out there in the marketplace. Specifically, when you go to the cloud, you're going to pick up all the work that they have with the operating systems -- they have had over time, but also layer in capabilities that people are going to be ordinarily interested at, go to the cloud things around AI, things around voice things around ambient things around here the cyber that comes with that. Those things are pretty interesting to people because of the rate at which you can put them into production. So that is a big piece, Eric, as to why I think we're going to get a lot of traction as a result of that. And Microsoft, as many other people have historically noted, healthcare is a very large marketplace. Some of the things that they're doing in this marketplace, my expectation is that they'll also leverage into some of the other industries that they serve and some of the other very large organizations they work with, around the globe. They are targeting a lot of large healthcare enterprises. They're targeting a large, a lot large if you will Ministries of Health in different countries around the world. And this mean it's not short on them. The ability not only to have Azure relationship with those organizations but also then to drive additional applications and capabilities into those organizations in a rapid manner. So my alignment or our alignment with them, we think is very strategic. They have things incredibly great to work with, the engineers they're supplying us with all the intellectual capital of those people of how we can get to where we need to get to at any exactly point in time is helpful, and then also just working with and going hand in hand with Microsoft, as we are calling on some of these large institutions, they are all interested in listening to what a joint relationship might look like, as they think about additional capabilities that sit either on top of or in place of existing historic, if you will, electronic health only opportunities. EricPercher: It's interesting, thank you. PaulBlack: You bet. EricPercher: Didn't really get to answer -- PaulBlack: Oh, I'm sorry; I didn't get to the final Eric one on Veradigm. Now, we've, Rick had a lot of discussions with them around with Microsoft around that as well. They're very interested in the closed loop nature that we offer of what we can do with pharma and payers. And they know they seem to be interested in that set of capabilities that we have. They also see it as unique in that the payer relationships. They have the pharma relationships, and we have provider relationships. Not everybody else has all three of those. Operator: Our next question comes from the line of Stephanie Demko with SVB Leerink. StephanieDemko: Hey, guys, I echo my congrats and thanks for making time for the questions. It sounds like you have been very busy this quarter. I'd love to hear more about your longer-term Veradigm strategy around the pharma digital ad spend wallets? Do you see any pockets of opportunity that leverage your Veradigm Life Sciences relationships with your clinician facing real estate in your core EHR? Or is that something that you're only using for in the Practice Fusion side of the business? PaulBlack: So, as you know, Stephanie, that's how Practice Fusion started, right was doing a lot of ad pharma like ads, and went through a learning curve on what was okay to do and kind of helpful as a clinical decision support and what was not okay to do, in terms of things that might be viewed as fostering more prescription activity, right. So they've kind of learned that lesson along the way. So I think we're really good at that -- go ahead. Because of the pure cloud nature of Practice Fusion, it's much easier to deliver those opportunities to a wide client base than it is with some of the client server technology of some of our other EHR platforms. But the longer term answer to your question is absolutely, I mean, that's what there's opportunities that was a part a big part of the acquisition case, when we bought Practice Fusion as we knew that they were doing some things that we thought we had a larger base to leverage that across, and we will continue to pursue that. StephanieDemko: Are there any opportunities in some of the adjacencies around the EHR, such as the patient portal, or maybe even having some sort of embedded telemedicine solution with an add component there? Zoom and clinician facing? PaulBlack: Yes, I -- let me say it this way, to say it as an ad, maybe is a little too narrow, are there opportunities to create new revenue streams off of the people the users of our personal health records? And are there opportunities to bring information to providers and reduce some of the friction that they have within interacting with the payers? The answer is, absolutely. I mean, that's really what Veradigm is doing for a living and they spin up new product streams, a new solution streams every quarter. So it's a place where we innovate on new solutions. There is a pretty good web of rule books, you got to weave your way through when we do that. So we intersect the commercial opportunities with a pretty strong view from our, and review from our compliance group to make sure we're staying within the rules. But yes, the opportunity is very real. StephanieDemko: Thank you. And then just one quick one for me. Microsoft has been known to sometimes do one way exclusivity on these partnerships. Is there anything like that into the deal or fully clean? PaulBlack: No. Very clean. Operator: Our next question comes from the line of Donald Hooker with KeyBanc Capital Markets. DonaldHooker: Hey, great, good afternoon. I just want to make sure a lot of questions have been asked here, of course. But just for my clarification here so I understand. So you guys, obviously, probably to, so when I think about the progress you've made with operating margins, or EBITDA margins in the core clinical and financial solution segment, I mean you just to be clear, you are at the top of your long term range there from what I understand from your comments. So if this was a seasonally weak quarter, and it sounds like things might be a little bit better next quarter, is there a reason why margins might recede from here? PaulBlack: Well, I think let's make sure we don't mix and match some of the comments, Don. The seasonal weakness was a comment I made with what is typically the bookings activity in the first quarter. It is it just tends to be a softer quarter. We and that's why we were very happy with where we came out for the quarter, not only did we have a good sequential lift and bookings, was the highest we've seen throughout all the last year. So that was more commentary on the selling environments improving a little bit. I think as you talked about EBITDA margins and I purposely made it clear that we'll see quarter-to-quarter volatility, that is a big function of revenue mix during a quarter and revenue mix was favorable in Q1 and we had a good boost in our EBITDA margins. We also had a nice flat curve to some of our SG&A in that segment; I'm going to see a little bit of a lift there over next couple quarters. So I think I mean your observation is right, the quarter was a great quarter was at the high end of the range. I think I don't think we're going to see that for each of the next three quarters in this segment. And so we'll see a little bit of a tail off here probably in that segment while the other segment grows. And so all my comments around segment margins were meant to just be clear that these are annual goals. And we will see some quarter-to-quarter volatility. DonaldHooker: Okay, thank you for clarifying that. And maybe a one maybe a mundane question here. You have the two segments, and you have an unallocated segment, I guess which my understanding was the EPSi which is now gone, I guess, is there some sort of run off here, is there sort of this is going to be? How do we sort of work that into our models? PaulBlack: Yes, it was more -- it was a little more, is outflow more than EPSi, Don, what you see this quarter is not going to vary much. What the reason we needed is we have some transfer pricing we do between the two segments. And obviously we have to eliminate that revenue when we do consolidation. We also have a couple of what I call public company costs that we don't allocate it out to the business segments and keep the -- so there's a little bit of pool of company costs. And then there's just the necessary elimination that has to happen for intercompany revenue. So what you see in Q1 is a pretty steady level, I think you could use that in any model, if you wanted to. Operator: Our next question comes from line of George Hill with Deutsche Bank. UnidentifiedAnalyst: Yes, hi, it's Maxie on for George, thanks for taking the questions. So you talked about the significant improvement in cost structure in service segment this quarter, going forward to achieve the long term margin goal, do you need to get more aggressive on the cost containment side? Or is it mostly going to be driven by revenue expansion? RickPoulton: Well, we've kind of covered a lot of that question in the last few questions. I think as the -- just the previous question, noted were this quarter's segment margin for our core clinical is -- that's ever been it's at the high end of the guidance range we said, but I am not bring that by saying the goals are annual goals. And I think we're going to see some quarter-to- quarter volatility. But largely, as we talked about earlier, this is one of, I think continued cost focused, no step function changes but focus along with some to modest replacement market wins, as well as some new pockets of demand opportunity. That's what's going to drive the core clinical and financial solutions toward on their continued journey upwards. The data analytics business, we're going to see a lot more of top lines lift, which will really be the catalyst for its margins to improve. UnidentifiedAnalyst: Great thanks. And maybe a quick one. We've seen improvement in client attrition last quarter, could you provide some color on the client attrition in the core business in Q1 and churn trends you expect to see for the rest of the year, thank you. PaulBlack: Yes, everything about our assumptions and beliefs around attrition are reflected in the guidance we've given. And we pointed out client attrition last year because we had a particular bolus that we knew was going to hit us. And we knew that we shared that upfront so that everybody can understand some of the year-over-year comparisons. If we ever got to a point where we had such a bolus, again, we'll provide the same guidance. But that's not -- that was not what we needed to do for 2021. And again, our outlook reflects everything that we see happening on that front. This concludes our Q&A. I like to hand it back to Mr. Black for closing remarks. Paul Black: Thanks everybody for spending time with us today. 2020 was a big year for us where we did a lot of reset, as we talked about at the JP Morgan conference. And we reset our cost structure; reset a bunch of different things inside the company, our portfolio, as well as we got a lot of focus on unlocking some value of some assets in the company. As I think about where we are today throughout the first quarter, we also are showing a lot of resiliency with regard to not only the people that work here, but also our clients, having now experienced some 14 months of a pandemic. And there are a lot of clients who've been on the front end of that of this that we respect everything that they've done. We're also seeing -- are starting to see a return to normalcy with regard to patient volumes and with regards in United States the revenues that our clients are seeing and expecting as a result of their day to day operations, which gives us the confidence to reaffirm the guidance that we gave you today. We appreciate your time and your interest in Allscripts. Thank you very much. Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.
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Allscripts Healthcare Solutions’ Investor Day Review

RBC Capital analysts provided their views on Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) following the company’s virtual investor day.

Given the company's H1/22 sale of its hospital/large practice businesses, which represented the majority of revenue and around half of 2021 EBITDA, the company hosted an investor day to educate the market on its remaining/go-forward business—Veradigm.

Along with a detailed look at each component and respective growth drivers, management also reaffirmed its 2022 guidance provided with the divestiture announcement in March.

Analysts at RBC Capital said they were encouraged by the heightened focus on the company’s higher-growth offerings and confident it has the balance sheet to support it. The analysts maintained their outperform rating and $22 price target on the company’s shares.