- EHR vendor Allscripts pulled its 2020 guidance and missed Wall Street expectations on both earnings and revenue for the first quarter, though bookings at the high end of Allscripts' forecasts were a bright spot for the company in its financial results for the period ended March 31.
- Bookings rang in at $205 million, down 28% from the record-setting first quarter of 2019 but still "pretty much across the board decent" given the coronavirus pandemic causing Allscripts' provider clients to funnel all resources into the COVID-19 response and away from IT investment, Allscripts CEO Paul Black said on a Thursday afternoon call with investors.
- Allscripts, taking advantage of the surge in telehealth demand as patients shelter in place, released an EHR-agnostic virtual care offering through its FollowMyHealth patient engagement platform earlier this year, that went from no demand pre-pandemic to over 70,000 total visits in April alone, across nearly 6,000 provider clients. The Chicago-based IT company expects the offering to remain profitable in the long-term, driving recurring revenue over time, CFO Rick Poulton said.
The pandemic has created another hurdle for Allscripts, which launched a margin improvement plan in March to recover from a more than $182 million loss in 2019. The 34-year-old vendor sells EHR, financial and population health management platforms to providers and healthcare facilities, which are all struggling financially amid the pandemic, diverting funds away from shoring up their IT infrastructures.
"There’s no playbook for what we’re all experiencing at a global scale," Black said.
Allscripts reported a loss of $20.4 million in the quarter on revenue of $417 million, down 3% year over year. The pandemic depressed revenue by an estimated $7 million to $10 million, Allscripts leadership said, otherwise revenue would have landed in the mid-range of prior guidance.
Flagging revenue was mainly due to a loss in non-recurring revenue, which fell almost 10% as new sales slid to a level "significantly lower" than normal, Poulton said. However, the vendor is bolstered in the near-term by $4.5 billion in backlog — a second consecutive quarter of growth — which helps cushion the bottom line in the quarter and beyond.
"We have a very resilient business model," Poulton said. "But of course we’re not immune."
The vendor was cheered by initial results of its telehealth offering, casting it as differentiated from more entrenched platforms like Teladoc or privately-held AmWell as it put patients in touch with the doctor at their hospital or practice, not a new face.
"You don’t just call up and get whoever happens to be hanging out on the couch that day," Black said in touting the model. Though revenue isn't volume-dependent — it relies on a per-provider, per-month revenue model — demand for the service has spiked amid the outbreak, and Allscripts believes demand will continue to rise over the remainder of the year.
Margin on a non-GAAP basis of 41.1% in the quarter continued to trend down for the vendor, following margins of 43.2% in the third quarter of 2019 and 43.5% in the fourth. Allscripts hired a financial advisory firm, Alix Partners, to work on a margin improvement plan over the last seven weeks. From the last week of March through April, the company made operational changes which it expects will yield roughly $75 million in annualized value.
In January, Allscripts finalized a $145 million settlement with the Department of Justice to quash claims a subsidiary, Practice Fusion, falsified EHR certification and violated anti-kickback laws. Allscripts initially planned to pay the amount in installments throughout 2020 and recover roughly half from myriad escrows and insurance policies.
Though the vendor did pay $57.3 million of the total in the first quarter, Allscripts asked the federal government for a partial deferment, given the pandemic and resulting economic pressure. Executives said they expect a lag of roughly $25 million of the settlement to drift in 2021.
Allscripts' stock was up almost 7% in aftermarket trading Thursday on the results.