- Fourth quarter GAAP revenue $517 million, $547 million
non-GAAP, representing growth of 22 and 27 percent, respectively,
year-over-year
- Fourth quarter GAAP EPS of $0.03; non-GAAP EPS of
$0.18, up 29% Y/Y, the highest quarter in 5+ years
- For full year 2017, Allscripts reported year-over-year
growth of 17% in non-GAAP revenue, 23% in adjusted EBITDA and 13%
in non-GAAP EPS
- Announced and closed the acquisition of Practice Fusion
– significantly expanding Allscripts client reach in U.S. physician
practices
- Announced agreement to divest of One Content
business
- Amended the Allscripts Credit Agreement, providing for
an increase in available liquidity and tenor
Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX) (Allscripts)
announced its financial results for the three months and year ended
December 31, 2017.
Fourth quarter 2017 GAAP revenue was $517
million, an increase of 22 percent year-over-year. Non-GAAP revenue
totaled $547 million, improving 27 percent year-over-year. For the
year ended December 31, 2017, GAAP revenue totaled $1,806 million,
an increase of 17 percent year-over-year. Non-GAAP revenue totaled
$1,841 million, also a 17 percent increase from 2016.
Bookings(1) were $314 million in the fourth
quarter of 2017. This result compares with $406 million in the
fourth quarter of 2016. For the year ended December 31, 2017
bookings totaled $1,311 million and contract revenue backlog as of
December 31, 2017, totaled $4.6 billion, up 15 percent compared to
a year ago.
Gross margin in the fourth quarter of 2017 was
41.4 percent on a GAAP basis and 47.8 percent on a non-GAAP basis,
compared with 43.8 and 48.1 percent, respectively, in the fourth
quarter of 2016.
On a GAAP basis, in the fourth quarter of 2017
total operating expenses, consisting of selling, general and
administrative and research and development expenses, were $219
million, or a 35 percent increase year-over-year. The company
recorded $25 million of legal, transaction-related and other costs
in the fourth quarter of 2017. This compares with $7 million of
such costs in the fourth quarter of 2016. Non-GAAP operating
expenses totaled $186 million, a 27 percent increase
year-over-year. The increase year-over-year was primarily due to
the acquisition of the Enterprise Information Solutions (EIS)
business from McKesson Corporation.
GAAP net income in the fourth quarter of 2017
totaled $6 million compared with net loss of $7 million in the
fourth quarter of 2016. Non-GAAP net income in the fourth quarter
of 2017 totaled $33 million, up 25 percent when compared with the
fourth quarter of 2016.
GAAP earnings per share in the fourth quarter of
2017 were $0.03, compared with loss per share of $0.04 in the
fourth quarter of 2016. Non-GAAP earnings per share in the fourth
quarter of 2017 were $0.18, compared with $0.14 in the fourth
quarter of 2016.
Adjusted EBITDA totaled $107 million in the
fourth quarter of 2017, a 28 percent increase compared with the
fourth quarter of 2016.
Cash flow from operations for the fourth quarter
of 2017 totaled $106 million, compared to $84 million the same
period of 2016, due to strengthening business results. Free cash
flow for the fourth quarter of 2017, totaled $68 million, compared
to $41 million in the same period of 2016.
“In the fourth quarter of 2017, Allscripts
achieved greater than 20 percent growth across non-GAAP revenue,
adjusted EBITDA and non-GAAP earnings per share,” Paul M. Black,
Chief Executive Officer of Allscripts, said. “We are especially
pleased that non-GAAP earnings per share achieved the highest level
in more than 5 years. 2017 proved to be a break-out year for
Allscripts not only financially, but also from an entrepreneurial,
innovation and efficiency perspective.”
Other Announcements
Today, we amended the Allscripts Credit Agreement, providing for
an increase in available liquidity and tenor as well as lower
interest rates. The amendment provides a $400 million term loan and
a $900 million revolving facility. This represents an increase
in borrowing capacity of $500 million and the maturity date was
extended to 2023.
Allscripts announced today that it has completed the acquisition
of Practice Fusion, a cloud-based electronic health record aimed
primarily at small, independent physician practices. This
transaction gives Allscripts the largest US market share in
outpatient settings and makes Allscripts the largest owner of
“actionable” clinical data sets. Approximately 30,000 ambulatory
sites, serving 5 million patients each month, currently use
Practice Fusion EHR, practice management, e-prescribing, lab and
patient portal technology.
Allscripts also announced today that it has entered into an
agreement to divest its One Content business to Hyland Software,
Inc. One Content is a healthcare document solution that captures,
indexes, stores and retrieves patient information. This solution
was acquired by Allscripts through the McKesson EIS
acquisition.
Black continued, “With the closing of the
Practice Fusion acquisition, the closing of the EIS acquisition and
the divestiture of the One Content business, we have in a very
capital efficient way, significantly added to our client footprint,
scale and breadth of the Company. We are well positioned in 2018
and beyond to distinguish Allscripts by offering complete,
comprehensive healthcare solutions to change the way healthcare is
delivered.”
2018 Financial Outlook
Allscripts is presenting annual guidance for revenue, Adjusted
EBITDA and non-GAAP earnings per share. Allscripts currently
expects to achieve the following financial results in 2018:
- Non-GAAP revenue of between $2.15 billion and $2.25 billion, up
17% to 22% versus 2017
- Adjusted EBITDA of between $420 million and $460 million, up
12% to 23% year over year, consisting of
- Allscripts, excluding Netsmart, Adjusted EBITDA between
$310-340 million, and;
- Netsmart Adjusted EBITDA between $110-120 million
- Non-GAAP earnings per share of between $0.72 to $0.82, an
increase of 16% to 32%
In providing financial guidance, the company
does not reconcile non-GAAP revenue, Adjusted EBITDA or non-GAAP
earnings per share guidance to the corresponding GAAP financial
measures. Allscripts does not provide guidance for the various
reconciling items since certain items that impact GAAP revenue and
net income are either outside of its control and/or cannot be
reasonably predicted.
Please see the “Explanation of Non-GAAP
Financial Measures” at the end of this press release for detailed
information on calculating non-GAAP measures. For a reconciliation
of other non-GAAP items, see the non-GAAP financial reconciliation
tables in this release (Tables 4, 5 and 6).
Conference Call:
Allscripts will conduct a conference call today,
Thursday, February 15, 2018, at 4:30 PM Eastern Time to discuss its
earnings release and other information. Participants may access the
conference call via webcast at http://investor.allscripts.com.
Participants also may access the conference call by dialing +1
(877) 269-7756 or +1 (201) 689-7817 (international) and requesting
Conference ID # 13675041.
A replay of the call will be available
approximately two hours after the conclusion of the call, for a
period of four weeks, on the Allscripts Investor Relations website
or by calling +1 (877) 660-6853 or +1 (201) 612-7415 - Conference
ID # 13675041.
Supplemental and non-GAAP financial information
is also available at http://investor.allscripts.com.
Footnotes
(1) Bookings reflect the value of executed contracts for
software, hardware, client services, private cloud hosting
services, outsourcing and other subscription-based services.
NOTE: All percentage changes described within this press release
are calculated from full dollar amounts as illustrated in the
accompanying financial statements and Allscripts Supplemental
Financial Data Workbook, posted on the Investor Relations website.
Rounding differences may occur when individually calculating
percentages or totals from rounded amounts included within the
press release body compared to full dollar amounts in the
tables.
About AllscriptsAllscripts
(NASDAQ:MDRX) is a leader in healthcare information technology
solutions that advance clinical, financial and operational results.
Our innovative solutions connect people, places and data across an
Open, Connected Community of Health™. Connectivity empowers
caregivers to make better decisions and deliver better care for
healthier populations. To learn more, visit
www.allscripts.com, Twitter,
YouTube and It Takes A
Community: The Allscripts Blog.
© 2018 Allscripts Healthcare, LLC and/or its affiliates. All
Rights Reserved.
Allscripts, the Allscripts logo, and other
Allscripts marks are trademarks of Allscripts Healthcare, LLC
and/or its affiliates. All other products are trademarks of their
respective holders, all rights reserved. Reference to these
products is not intended to imply affiliation with or sponsorship
of Allscripts Healthcare, LLC and/or its affiliates.
For more information
contact:
Investors:Danielle
Protexter312-386-6779danielle.protexter@allscripts.com
Media: Concetta
Rasiarmos312-447-2466concetta.rasiarmos@allscripts.com
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including the statements under “2018 Financial Outlook”.
These forward-looking statements are based on the current beliefs
and expectations of Allscripts management, only speak as of the
date that they are made, and are subject to significant risks and
uncertainties. Such statements can be identified by the use of
words such as “future,” “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “predicts,” “will,” “would,”
“could,” “can,” “may,” and similar terms. Actual results could
differ from those set forth in the forward-looking statements and
reported results should not be considered an indication of future
performance. Certain factors that could cause Allscripts actual
results to differ materially from those described in the
forward-looking statements include, but are not limited to: the
expected financial contribution and results of the Netsmart joint
business entity, including consolidation for financial reporting
purposes, the EIS business, and the provider/patient solutions
business acquired from NantHealth; the timing and ultimate
completion of our acquisition of Practice Fusion; the timing and
ultimate completion of our divestiture of One Content; the
successful integration of Practice Fusion, EIS and the
provider/patient solutions businesses; the anticipated and
unanticipated expenses and liabilities related to the Practice
Fusion, EIS and provider/patient solutions businesses; Allscripts
failure to compete successfully; consolidation in Allscripts
industry; current and future laws, regulations and industry
initiatives; increased government involvement in Allscripts
industry; the failure of markets in which Allscripts operates to
develop as quickly as expected; Allscripts or its customers’
failure to see the benefits of government programs; changes in
interoperability or other regulatory standards; the effects of the
realignment of Allscripts sales, services and support
organizations; market acceptance of Allscripts products and
services; the unpredictability of the sales and implementation
cycles for Allscripts products and services; Allscripts ability to
manage future growth; Allscripts ability to introduce new products
and services; Allscripts ability to establish and maintain
strategic relationships; risks related to the acquisition of new
companies or technologies; the performance of Allscripts products;
Allscripts ability to protect its intellectual property rights; the
outcome of legal proceedings involving Allscripts; Allscripts
ability to hire, retain and motivate key personnel; performance by
Allscripts content and service providers; liability for use of
content; security breaches; price reductions; Allscripts ability to
license and integrate third party technologies; Allscripts ability
to maintain or expand its business with existing customers; risks
related to international operations; changes in tax rates or laws;
business disruptions; Allscripts ability to maintain proper and
effective internal controls; and asset and long-term investment
impairment charges. Additional information about these and other
risks, uncertainties, and factors affecting Allscripts business is
contained in Allscripts filings with the Securities and Exchange
Commission, including under the caption “Risk Factors” in the most
recent Allscripts Annual Report on Form 10-K and subsequent Form
10-Qs. Allscripts does not undertake to update forward-looking
statements to reflect changed assumptions, the impact of
circumstances or events that may arise after the date of the
forward-looking statements, or other changes in its business,
financial condition or operating results over time.
|
|
Table 1 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Consolidated Balance
Sheets |
|
(In millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$155.8 |
|
$95.6 |
|
Restricted cash |
|
$6.7 |
|
$1.0 |
|
Accounts
receivable, net |
|
|
567.9 |
|
|
405.1 |
|
Prepaid
expenses and other current assets |
|
|
115.5 |
|
|
102.6 |
|
Total
current assets |
|
|
845.9 |
|
|
604.3 |
|
Available
for sale marketable securities |
|
|
0.0 |
|
|
149.1 |
|
Fixed
assets, net |
|
|
165.6 |
|
|
148.8 |
|
Software
development costs, net |
|
|
222.2 |
|
|
163.9 |
|
Intangible assets, net |
|
|
826.9 |
|
|
741.4 |
|
Goodwill |
|
|
2,005.0 |
|
|
1,924.1 |
|
Deferred
taxes, net |
|
|
4.6 |
|
|
2.8 |
|
Other
assets |
|
|
148.7 |
|
|
97.8 |
|
Assets
attributable to discontinued operations |
|
|
11.3 |
|
|
0.0 |
|
Total
assets |
|
$4,230.2 |
|
$3,832.2 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$97.6 |
|
$126.1 |
|
Accrued
expenses |
|
|
85.9 |
|
|
86.1 |
|
Accrued
compensation and benefits |
|
|
99.6 |
|
|
64.3 |
|
Deferred
revenue |
|
|
546.8 |
|
|
363.8 |
|
Current
maturities of long-term debt |
|
|
27.7 |
|
|
15.2 |
|
Non-recourse current maturities of long-term debt - Netsmart |
|
|
2.8 |
|
|
2.5 |
|
Current
maturities of capital lease obligations |
|
|
7.9 |
|
|
9.1 |
|
Total
current liabilities |
|
|
868.3 |
|
|
667.1 |
|
Long-term
debt |
|
|
906.7 |
|
|
717.9 |
|
Non-recourse long-term debt - Netsmart |
|
|
625.2 |
|
|
576.9 |
|
Long-term
capital lease obligations |
|
|
7.1 |
|
|
9.9 |
|
Deferred
revenue |
|
|
24.0 |
|
|
18.0 |
|
Deferred
taxes, net |
|
|
93.6 |
|
|
141.8 |
|
Other
liabilities |
|
|
92.3 |
|
|
39.7 |
|
Liabilities attributable to discontinued operations |
|
|
21.4 |
|
|
0.0 |
|
Total
liabilities |
|
|
2,638.6 |
|
|
2,171.3 |
|
Redeemable convertible non-controlling interest - Netsmart |
|
|
431.5 |
|
|
387.7 |
|
Total
Allscripts Healthcare Solutions, Inc.'s stockholders' equity |
|
|
1,120.9 |
|
|
1,232.5 |
|
Non-controlling interest |
|
|
39.2 |
|
|
40.7 |
|
Total
stockholders’ equity |
|
|
1,160.1 |
|
|
1,273.2 |
|
Total
liabilities and stockholders’ equity |
|
$4,230.2 |
|
$3,832.2 |
|
|
|
|
|
|
|
|
|
Table 2 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Consolidated Statements of
Operations |
|
(In millions, except per-share amounts) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
Software
delivery, support and maintenance |
|
$328.7 |
|
|
$280.7 |
|
|
$1,174.7 |
|
|
$1,012.4 |
|
|
Client
services |
|
|
188.6 |
|
|
|
144.7 |
|
|
|
631.6 |
|
|
|
537.5 |
|
|
Total
revenue |
|
|
517.3 |
|
|
|
425.4 |
|
|
|
1,806.3 |
|
|
|
1,549.9 |
|
|
Cost of
revenue: |
|
|
|
|
|
|
|
|
|
Software
delivery, support and maintenance |
|
|
108.9 |
|
|
|
90.2 |
|
|
|
368.2 |
|
|
|
331.1 |
|
|
Client
services |
|
|
161.6 |
|
|
|
123.2 |
|
|
|
541.4 |
|
|
|
459.2 |
|
|
Amortization of software development and acquisition-related assets
(a) |
|
|
32.8 |
|
|
|
25.7 |
|
|
|
114.6 |
|
|
|
88.6 |
|
|
Total
cost of revenue |
|
|
303.3 |
|
|
|
239.1 |
|
|
|
1,024.2 |
|
|
|
878.9 |
|
|
Gross
profit |
|
|
214.0 |
|
|
|
186.3 |
|
|
|
782.1 |
|
|
|
671.0 |
|
|
Selling,
general and administrative expenses |
|
|
145.9 |
|
|
|
115.1 |
|
|
|
486.3 |
|
|
|
392.8 |
|
|
Research
and development |
|
|
73.5 |
|
|
|
47.8 |
|
|
|
220.2 |
|
|
|
187.9 |
|
|
Asset
impairment charges |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
4.7 |
|
|
Amortization of intangible and acquisition-related assets |
|
|
10.4 |
|
|
|
10.9 |
|
|
|
33.7 |
|
|
|
25.8 |
|
|
(Loss)
income from operations |
|
|
(15.8 |
) |
|
|
12.5 |
|
|
|
41.9 |
|
|
|
59.8 |
|
|
Interest
expense and other, net (b) |
|
|
(23.8 |
) |
|
|
(24.8 |
) |
|
|
(87.0 |
) |
|
|
(67.1 |
) |
|
Impairment of and losses on long-term investments |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
(165.3 |
) |
|
|
0.0 |
|
|
Equity in
net income (loss) of unconsolidated investments |
|
|
0.1 |
|
|
|
0.0 |
|
|
|
0.8 |
|
|
|
(7.5 |
) |
|
Loss
before income taxes |
|
|
(39.5 |
) |
|
|
(12.3 |
) |
|
|
(209.6 |
) |
|
|
(14.8 |
) |
|
Income
tax benefit |
|
|
49.6 |
|
|
|
15.2 |
|
|
|
50.7 |
|
|
|
17.8 |
|
|
Income
(loss) from continuing operations, net of tax |
|
|
10.1 |
|
|
|
2.9 |
|
|
|
(158.9 |
) |
|
|
3.0 |
|
|
Income
from discontinued operations, net of tax |
|
|
4.7 |
|
|
|
0.0 |
|
|
|
4.7 |
|
|
|
0.0 |
|
|
Net
income (loss) |
|
|
14.8 |
|
|
|
2.9 |
|
|
|
(154.2 |
) |
|
|
3.0 |
|
|
Net loss
(income) attributable to non-controlling interest |
|
|
1.9 |
|
|
|
(0.1 |
) |
|
|
1.5 |
|
|
|
(0.2 |
) |
|
Accretion
of redemption preference on redeemable convertible non-controlling
interest - Netsmart |
|
|
(10.9 |
) |
|
|
(10.2 |
) |
|
|
(43.8 |
) |
|
|
(28.5 |
) |
|
Net
income (loss) attributable to Allscripts Healthcare Solutions, Inc.
stockholders |
|
$5.8 |
|
|
($7.4 |
) |
|
($196.5 |
) |
|
($25.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss from
continuing operations per share - basic and diluted |
|
$0.00 |
|
|
($0.04 |
) |
|
($1.12 |
) |
|
($0.14 |
) |
|
Income
from discontinued operations per share - basic and diluted |
|
$0.03 |
|
|
$0.00 |
|
|
$0.03 |
|
|
$0.00 |
|
|
Income
(loss) per share - basic and diluted |
|
$0.03 |
|
|
($0.04 |
) |
|
($1.09 |
) |
|
($0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
180.7 |
|
|
|
183.2 |
|
|
|
180.8 |
|
|
|
186.2 |
|
|
Diluted |
|
|
180.7 |
|
|
|
183.2 |
|
|
|
180.8 |
|
|
|
186.2 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Amortization of
software development and acquisition-related assets includes: |
|
|
|
|
|
|
|
|
|
Amortization of capitalized software development costs |
|
$16.7 |
|
|
$12.1 |
|
|
$57.0 |
|
|
$43.3 |
|
|
Amortization of acquisition-related intangible assets |
|
|
16.1 |
|
|
|
13.6 |
|
|
|
57.6 |
|
|
|
45.3 |
|
|
|
|
$32.8 |
|
|
$25.7 |
|
|
$114.6 |
|
|
$88.6 |
|
|
|
|
|
|
|
|
|
|
|
|
(b) Interest expense and other, net are comprised of the
following for the periods presented: |
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
amortization of 1.25% Cash Convertible Notes original issue
discount |
|
$3.0 |
|
|
$2.9 |
|
|
$12.0 |
|
|
$11.4 |
|
|
Non-cash
write-off of unamortized deferred debt issuance costs |
|
|
0.0 |
|
|
|
5.2 |
|
|
|
- |
|
|
|
5.2 |
|
|
Non-cash
charges to interest expense and other, net |
|
|
3.0 |
|
|
|
8.1 |
|
|
|
12.0 |
|
|
|
16.6 |
|
|
Interest
expense |
|
|
20.2 |
|
|
|
15.8 |
|
|
|
69.5 |
|
|
|
46.4 |
|
|
Amortization of discounts and debt issuance costs |
|
|
1.6 |
|
|
|
1.5 |
|
|
|
6.0 |
|
|
|
5.2 |
|
|
Other
income, net |
|
|
(1.0 |
) |
|
|
(0.6 |
) |
|
|
(0.5 |
) |
|
|
(1.1 |
) |
|
Total
interest expense and other, net |
|
$23.8 |
|
|
$24.8 |
|
|
$87.0 |
|
|
$67.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
|
(In millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$14.8 |
|
|
$2.9 |
|
|
($ |
154.2 |
) |
|
$3.0 |
|
|
Non-cash
adjustments to net (loss) income: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
63.4 |
|
|
|
51.9 |
|
|
|
218.5 |
|
|
|
172.4 |
|
|
Stock-based compensation expense |
|
|
10.7 |
|
|
|
13.2 |
|
|
|
38.8 |
|
|
|
42.9 |
|
|
Impairment of and losses on long-term investments |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
165.3 |
|
|
|
0.0 |
|
|
Other
non-cash charges, net |
|
|
(50.3 |
) |
|
|
(12.7 |
) |
|
|
(52.6 |
) |
|
|
(3.7 |
) |
|
Total
non-cash adjustments to income |
|
|
23.8 |
|
|
|
52.4 |
|
|
|
370.0 |
|
|
|
211.6 |
|
|
Cash
impact of changes in operating assets and liabilities |
|
|
67.6 |
|
|
|
28.6 |
|
|
|
63.6 |
|
|
|
54.4 |
|
|
Net cash
provided by operating activities |
|
|
106.2 |
|
|
|
83.9 |
|
|
|
279.4 |
|
|
|
269.0 |
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(6.2 |
) |
|
|
(10.4 |
) |
|
|
(46.4 |
) |
|
|
(35.4 |
) |
|
Capitalized software |
|
|
(31.8 |
) |
|
|
(32.5 |
) |
|
|
(138.9 |
) |
|
|
(102.5 |
) |
|
Purchases
of equity securities in partner entities, business acquisitions,
net of cash acquired and other investments |
|
|
(168.2 |
) |
|
|
(60.1 |
) |
|
|
(227.9 |
) |
|
|
(1,016.1 |
) |
|
Other
proceeds from investing activities |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.2 |
|
|
|
0.0 |
|
|
Net cash
used in investing activities |
|
|
(206.2 |
) |
|
|
(103.0 |
) |
|
|
(413.0 |
) |
|
|
(1,154.0 |
) |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
Repurchase of common stock |
|
|
0.0 |
|
|
|
(50.1 |
) |
|
|
(12.1 |
) |
|
|
(121.2 |
) |
|
Proceeds
from issuance of redeemable convertible preferred stock |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
333.6 |
|
|
Proceeds
from sale or issuance of common stock |
|
|
1.6 |
|
|
|
0.0 |
|
|
|
1.6 |
|
|
|
0.1 |
|
|
Stock-based compensation-related payments, net |
|
|
(0.5 |
) |
|
|
(0.8 |
) |
|
|
(7.3 |
) |
|
|
(7.2 |
) |
|
Credit
facilities and capital lease payments, net |
|
|
154.3 |
|
|
|
90.2 |
|
|
|
219.7 |
|
|
|
660.0 |
|
|
Other,
net |
|
|
(2.4 |
) |
|
|
0.0 |
|
|
|
(3.3 |
) |
|
|
0.0 |
|
|
Net cash
provided by financing activities |
|
|
153.0 |
|
|
|
39.3 |
|
|
|
198.6 |
|
|
|
865.3 |
|
|
Effect of
exchange rate changes on cash and cash equivalents |
|
|
0.1 |
|
|
|
(0.9 |
) |
|
|
0.9 |
|
|
|
(0.6 |
) |
|
Net
increase (decrease) in cash and cash equivalents |
|
|
53.1 |
|
|
|
19.3 |
|
|
|
65.9 |
|
|
|
(20.3 |
) |
|
Cash and cash
equivalents, beginning of period |
|
|
109.4 |
|
|
|
77.3 |
|
|
|
96.6 |
|
|
|
116.9 |
|
|
Cash and cash
equivalents, end of period |
|
$162.5 |
|
|
$96.6 |
|
|
$162.5 |
|
|
$96.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Condensed Non-GAAP Financial
Information |
|
(In millions, except per share amounts and
percentages) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
30, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Total
revenue, as reported |
$517.3 |
|
|
$425.4 |
|
|
$1,806.3 |
|
|
$1,549.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Total non-GAAP revenue |
$546.8 |
|
|
$429.4 |
|
|
$1,840.8 |
|
|
$1,575.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit, as reported |
$214.0 |
|
|
$186.3 |
|
|
$782.1 |
|
|
$671.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Acquisition-related amortization |
|
16.1 |
|
|
|
13.6 |
|
|
|
57.6 |
|
|
|
45.3 |
|
|
Stock-based compensation expense |
|
1.5 |
|
|
|
2.0 |
|
|
|
7.5 |
|
|
|
8.8 |
|
|
Transaction-related and other costs (a) |
|
0.1 |
|
|
|
0.6 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
Total non-GAAP gross profit |
$261.2 |
|
|
$206.5 |
|
|
$882.0 |
|
|
$751.5 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
income from operations, as reported |
($15.8 |
) |
|
$12.5 |
|
|
$41.9 |
|
|
$59.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Acquisition-related amortization |
|
26.5 |
|
|
|
24.5 |
|
|
|
91.3 |
|
|
|
71.1 |
|
|
Stock-based compensation expense |
|
11.3 |
|
|
|
13.3 |
|
|
|
41.7 |
|
|
|
44.2 |
|
|
Transaction-related and other costs (a) |
|
24.2 |
|
|
|
6.6 |
|
|
|
56.8 |
|
|
|
13.4 |
|
|
Non-cash asset impairment charges |
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
4.7 |
|
|
Total non-GAAP operating income |
$75.7 |
|
|
$60.9 |
|
|
$266.2 |
|
|
$219.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) attributable to Allscripts Healthcare Solutions, Inc.
stockholders, as reported |
$5.8 |
|
|
($7.4 |
) |
|
($196.5 |
) |
|
($25.7 |
) |
|
Net (loss) income attributable to non-controlling interest |
|
(1.9 |
) |
|
|
0.1 |
|
|
|
(1.5 |
) |
|
|
0.2 |
|
|
Accretion of redemption preference on redeemable convertible
non-controlling interest - Netsmart |
|
10.9 |
|
|
|
10.2 |
|
|
|
43.8 |
|
|
|
28.5 |
|
|
Less: Income from discontinued operations, net of tax |
|
(4.7 |
) |
|
|
0.0 |
|
|
|
(4.7 |
) |
|
|
0.0 |
|
|
Net income
(loss) from continuing operations, as reported |
$10.1 |
|
|
$2.9 |
|
|
($158.9 |
) |
|
$3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Acquisition-related amortization |
|
26.5 |
|
|
|
24.5 |
|
|
|
91.3 |
|
|
|
71.1 |
|
|
Stock-based compensation expense |
|
11.3 |
|
|
|
13.3 |
|
|
|
41.7 |
|
|
|
44.2 |
|
|
Transaction-related and other costs (a) |
|
24.8 |
|
|
|
6.6 |
|
|
|
57.4 |
|
|
|
13.4 |
|
|
Non-cash asset impairment charges |
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
4.7 |
|
|
Non-cash charges to interest expense and other |
|
3.0 |
|
|
|
8.1 |
|
|
|
12.0 |
|
|
|
16.6 |
|
|
Impairment of and losses on long-term investments |
|
0.0 |
|
|
|
0.0 |
|
|
|
165.3 |
|
|
|
0.0 |
|
|
Equity in net (income) loss of unconsolidated investments |
|
(0.1 |
) |
|
|
0.0 |
|
|
|
(0.8 |
) |
|
|
7.5 |
|
|
Tax effect of adjustments to reconcile GAAP to non-GAAP net
income |
|
(33.2 |
) |
|
|
(19.7 |
) |
|
|
(140.3 |
) |
|
|
(64.1 |
) |
|
Tax rate alignment |
|
(35.8 |
) |
|
|
(10.9 |
) |
|
|
22.6 |
|
|
|
(12.6 |
) |
|
Total Non-GAAP net income |
$36.1 |
|
|
$28.8 |
|
|
$124.8 |
|
|
$109.6 |
|
|
Less: Non-GAAP net income attributable to non-controlling
interest |
|
(3.1 |
) |
|
|
(2.4 |
) |
|
|
(11.9 |
) |
|
|
(5.5 |
) |
|
Non-GAAP net income attributable to Allscripts Healthcare
Solutions, Inc. |
$33.0 |
|
|
$26.4 |
|
|
$112.9 |
|
|
$104.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
effective tax rate |
|
35% |
|
|
|
35% |
|
|
|
35% |
|
|
|
35% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
shares outstanding - diluted |
|
184.1 |
|
|
|
185.7 |
|
|
|
182.5 |
|
|
|
187.9 |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
earnings per share - basic and diluted, as reported |
$0.03 |
|
|
($0.04 |
) |
|
($1.09 |
) |
|
($0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings per share attributable to Allscripts
Healthcare Solutions, Inc. - diluted |
$0.18 |
|
|
$0.14 |
|
|
$0.62 |
|
|
$0.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
Adjustments to reconcile GAAP to non-GAAP net income are presented
gross of tax, with net tax effects included in row titled "Tax
effect of adjustments to reconcile GAAP to non-GAAP net
income". |
|
(a) Transaction-related and other costs included in cost of
revenue, operating expenses and non-operating expenses are
comprised of the following for the periods presented: |
|
|
|
Three Months Ended December
30, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and
other costs |
|
9.0 |
|
|
|
2.5 |
|
|
|
29.7 |
|
|
|
2.7 |
|
|
Transaction-related costs |
|
15.8 |
|
|
|
4.1 |
|
|
|
27.7 |
|
|
|
10.7 |
|
|
Total transaction-related and other costs |
$24.8 |
|
|
$6.6 |
|
|
$57.4 |
|
|
$13.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Non-GAAP Financial Information - Adjusted
EBITDA |
|
(In millions, except percentages) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Total revenue, as
reported |
|
$517.3 |
|
|
$425.4 |
|
|
$1,806.3 |
|
|
$1,549.9 |
|
|
Acquisition-related deferred revenue adjustments |
|
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Total non-GAAP
revenue |
|
$546.8 |
|
|
$429.4 |
|
|
$1,840.8 |
|
|
$1,575.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from
continuing operations, as reported |
|
$10.1 |
|
|
$2.9 |
|
|
|
(158.9 |
) |
|
$3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related deferred revenue adjustments |
|
|
29.5 |
|
|
|
4.0 |
|
|
|
34.5 |
|
|
|
25.8 |
|
|
Depreciation and amortization |
|
|
63.4 |
|
|
|
51.9 |
|
|
|
218.5 |
|
|
|
172.4 |
|
|
Stock-based compensation expense |
|
|
11.3 |
|
|
|
13.3 |
|
|
|
41.7 |
|
|
|
44.2 |
|
|
Transaction-related and other costs (a) |
|
|
23.3 |
|
|
|
6.6 |
|
|
|
55.0 |
|
|
|
13.4 |
|
|
Non-cash
asset impairment charges |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
4.7 |
|
|
Interest
expense and other, net (b) |
|
|
19.2 |
|
|
|
20.4 |
|
|
|
69.0 |
|
|
|
50.5 |
|
|
Impairment of and losses on long-term investments |
|
|
0.0 |
|
|
|
0.0 |
|
|
|
165.3 |
|
|
|
0.0 |
|
|
Equity in
net loss of unconsolidated investments |
|
|
(0.1 |
) |
|
|
0.0 |
|
|
|
(0.8 |
) |
|
|
7.5 |
|
|
Tax
(benefit)/provision |
|
|
(49.6 |
) |
|
|
(15.2 |
) |
|
|
(50.7 |
) |
|
|
(17.8 |
) |
|
Adjusted
EBITDA |
|
$107.1 |
|
|
$83.9 |
|
|
$373.6 |
|
|
$303.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (c) |
|
|
20% |
|
|
|
20% |
|
|
|
20% |
|
|
|
19% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Transaction-related and other costs has been adjusted from
the amounts presented in the reconciliation of GAAP and non-GAAP
income from operations, as shown in Table 4, in order to remove the
accelerated amortization of assets to be disposed from
transaction-related and other costs since such amortization is also
included in depreciation and amortization. |
|
|
|
|
|
|
|
|
|
|
|
(b) Interest expense and other, net has been adjusted from the
amounts presented in the statements of operations in order to
remove the amortization of the fair value of the cash conversion
option embedded in the 1.25% Cash Convertible Notes and deferred
debt issuance costs from interest expense since such amortization
is also included in depreciation and amortization. |
|
|
|
|
|
|
|
|
|
|
|
(c) Adjusted EBITDA margin is calculated by dividing adjusted
EBITDA by non-GAAP revenue. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6 |
|
Allscripts Healthcare Solutions,
Inc. |
|
Non-GAAP Financial Information - Free Cash
Flow |
|
(In millions) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net cash
provided by operating activities |
|
$106.2 |
|
|
$83.9 |
|
|
$279.4 |
|
|
$269.0 |
|
|
Cash
flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
(6.2 |
) |
|
|
(10.4 |
) |
|
|
(46.4 |
) |
|
|
(35.4 |
) |
|
Capitalized software |
|
|
(31.8 |
) |
|
|
(32.5 |
) |
|
|
(138.9 |
) |
|
|
(102.5 |
) |
|
Free cash
flow |
|
$68.2 |
|
|
$41.0 |
|
|
$94.1 |
|
|
$131.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Explanation of Non-GAAP Financial Measures
Allscripts reports its financial results in
accordance with U.S. generally accepted accounting principles, or
GAAP. To supplement this information, Allscripts presents in this
release non-GAAP revenue, gross profit, gross margin, operating
expense, Adjusted EBITDA, effective income tax rate, net income and
earnings per share, which are considered non-GAAP financial
measures under Section 101 of Regulation G under the Securities
Exchange Act of 1934, as amended. The definitions of non-GAAP
financial measures used throughout this document are presented
below:
- Non-GAAP revenue consists of GAAP revenue, as reported, and
adds back recognized deferred revenue from the Enterprise
Information Solutions, Netsmart, NantHealth’s provider/patient
engagement business and non-material consolidated affiliates that
is eliminated for GAAP purposes due to purchase accounting
adjustments.
- Non-GAAP gross profit consists of GAAP gross profit, as
reported, and excludes acquisition-related deferred revenue
adjustments, acquisition-related amortization, stock-based
compensation expense and transaction-related and other costs.
Non-GAAP gross margin consists of non-GAAP gross profit as a
percentage of non-GAAP revenue in the applicable period. For the
fourth quarter of 2017, non-GAAP gross margin totaled 47.8 percent,
consisting of non-GAAP gross profit of $261.2 million divided by
non-GAAP revenue of $546.8 million. For the fourth quarter of 2016,
non-GAAP gross margin totaled 48.1 percent, consisting of non-GAAP
gross profit of $206.5 million divided by non-GAAP revenue of
$429.4 million. Reconciliations to GAAP gross profit are found in
Table 4 within this press release.
- Non-GAAP operating expense consists of GAAP selling, general
and administrative expenses (SG&A) and research and development
expense (R&D), as reported, and excludes transaction-related
and other costs and stock-based compensation expense recorded to
SG&A and R&D. For the fourth quarter of 2017, non-GAAP
operating expense totaled $185.5 million, consisting of $145.9
million of GAAP SG&A and $73.5 million of GAAP R&D expense
and excluding $24.2 million of total transaction-related and other
costs and $9.8 million of stock-based compensation expense recorded
to SG&A and R&D. For the fourth quarter of 2016, non-GAAP
operating expense totaled $145.6 million consisting of $115.1
million of GAAP SG&A and $47.8 million of GAAP R&D expense
and excluding $6.0 million of transaction-related and other costs
and $11.3 million of stock-based compensation expense recorded to
SG&A and R&D. Please note operating expense totals may not
sum due to rounding.
- Adjusted EBITDA is a non-GAAP measure and consists of GAAP net
income (loss), as reported, and adjusts for: acquisition-related
deferred revenue adjustments; depreciation and amortization;
stock-based compensation expense; transaction-related and other
costs; non-cash asset and long-term investment impairment charges;
interest expense and other, net; equity in net earnings of
unconsolidated investments; and tax provision (benefit).
- Non-GAAP effective income tax rate is based on non-GAAP pre-tax
earnings and consists of the statutory federal income tax rate,
Allscripts effective state income tax rate and adjustments for
permanent differences.
- Non-GAAP net income consists of GAAP net income/(loss), as
reported, and adds back acquisition-related deferred revenue
adjustments, acquisition-related amortization, stock-based
compensation expense, transaction-related and other costs, non-cash
asset and long-term investment impairment charges, non-cash charges
to interest expense and other, and equity in net earnings of
unconsolidated investments and the related tax effect of the
aforementioned adjustments. Non-GAAP net income also includes a tax
rate alignment adjustment.
- Non-GAAP net income attributable to Allscripts Healthcare
Solutions, Inc. is a non-GAAP measure and consists of Non-GAAP net
income, as described above, with an adjustment to reduce Non-GAAP
net income for the percentage of non-controlling interest outside
Allscripts ownership position. For this presentation, Netsmart
preferred stock is treated as if it was converted to common stock.
There can be no assurance that the holders of Netsmart preferred
stock will elect to convert their holdings to common stock.
- Non-GAAP earnings per share consist of non-GAAP net income, as
defined above, divided by weighted shares outstanding – diluted in
the applicable period.
- Free cash flow consists of GAAP cash flows provided by
operating activities in the applicable period, net of capital
expenditures and capitalized software costs.
Acquisition-Related Deferred Revenue
Adjustments. Deferred revenue adjustments include
acquisition-related deferred revenue adjustments, which reflect the
fair value adjustments to deferred revenue acquired in a business
acquisition. The fair value of acquired deferred revenue represents
an amount equivalent to the estimated cost plus an appropriate
profit margin, to perform services related to the acquiree's
software and product support, which assumes a legal obligation to
do so, based on the deferred revenue balances as of the acquisition
date. Allscripts adds back acquisition-related deferred revenue
adjustments for its non-GAAP financial measures because it believes
the inclusion of this amount directly correlates to the underlying
performance of Allscripts operations.
Acquisition-Related
Amortization. Acquisition-related amortization expense is
a non-cash expense arising primarily from the acquisition of
intangible assets in connection with acquisitions or investments.
Allscripts excludes acquisition-related amortization expense from
non-GAAP gross profit, non-GAAP operating income, and non-GAAP net
income because it believes (i) the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of Allscripts business operations and (ii) such
expenses can vary significantly between periods because of new
acquisitions and full amortization of previously acquired
intangible assets. Investors should note that the use of these
intangible assets contributed to revenue in the periods presented
and will contribute to future revenue generation, and the related
amortization expense will recur in future periods.
Stock-Based Compensation
Expense. Stock-based compensation expense is a non-cash
expense arising from the grant of stock-based awards. Allscripts
excludes stock-based compensation expense from non-GAAP gross
profit, non-GAAP operating income, non-GAAP operating expense,
non-GAAP net income and Adjusted EBITDA because it believes (i) the
amount of such expenses in any specific period may not directly
correlate to the underlying performance of Allscripts business
operations and (ii) such expenses can vary significantly between
periods as a result of the timing and valuation of grants of new
stock-based awards, including grants in connection with
acquisitions. Investors should note that stock-based compensation
is a key incentive offered to employees whose efforts contributed
to the operating results in the periods presented and are expected
to contribute to operating results in future periods, and such
expense will recur in future periods.
Transaction-Related and Other
Costs. Transaction-related and other costs relate to
certain legal proceedings, consulting, severance and other charges
incurred in connection with activities that are considered
one-time. For the fourth quarter of 2017, Allscripts incurred $25
million of transaction-related and other expenses.
Allscripts excludes transaction-related and
other costs, in whole or in part, from non-GAAP gross profit,
non-GAAP operating income, non-GAAP operating expense, non-GAAP net
income and Adjusted EBITDA because it believes (i) the amount of
such expenses in any specific period may not directly correlate to
the underlying performance of Allscripts business operations and
(ii) such expenses can vary significantly between periods.
Non-Cash Charges to Interest Expense and
Other. Non-cash charges to interest expense include the
amortization of the fair value of the cash conversion option
embedded in the 1.25 percent Cash Convertible Notes issued by
Allscripts during the second quarter of 2013.
Non-Cash Asset Impairment
Charges. Asset impairment charges relate primarily to
product consolidation activities and the write-down of the carrying
value of equity investments in non-consolidated third parties.
Impairment of and Losses on Long-Term
Investments. Impairment of and losses on long-term
investments relates to other-than-temporary non-cash impairment
charges associated with such investments based on management’s
assessment of the likelihood of near-term recovery of the
investments’ value. The amounts recorded during the year ended
December 31, 2017 primarily relate to our investment in NantHealth
common stock, which was disposed of in connection with the
NantHealth provider/patient solutions business acquisition.
Equity in Net Income (loss) of
Unconsolidated Investments. Equity in net income (loss) of
unconsolidated investments represents Allscripts share of the
equity earnings (losses) of our investments in third parties
accounted for under the equity method, including the amortization
of cost basis adjustments. The majority of the amount recognized in
prior periods represents our share of the net loss incurred by
NantHealth LLC, along with the amortization of cost basis
adjustments. Our investment in NantHealth was accounted as an
available-for-sale marketable security after NantHealth’s initial
public offering in June 2016.
Tax Rate Alignment. Tax
adjustment aligns the applicable period’s effective tax rate to the
expected annual non-GAAP effective tax rate.
Management also believes that non-GAAP revenue,
gross profit, gross margin, operating expense, effective income tax
rate, net income, earnings per share, Adjusted EBITDA, and free
cash flow provide useful supplemental information to management and
investors regarding the underlying performance of Allscripts
business operations. Acquisition accounting adjustments made in
accordance with GAAP can make it difficult to make meaningful
comparisons of the underlying operations of the business without
considering the non-GAAP adjustments provided and discussed
herein.
Management also uses this information internally
for forecasting and budgeting, as it believes that these measures
are indicative of core operating results. In addition, management
may use non-GAAP gross profit, operating expense, operating income,
net income, earnings per share and/or Adjusted EBITDA to measure
achievement under Allscripts stock and cash incentive compensation
plans. Note, however, that non-GAAP gross profit, operating income,
net income earnings per share and Adjusted EBITDA are performance
measures only, and they do not provide any measure of cash flow or
liquidity. Allscripts considers free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by the business after
capital expenditures and capitalized software costs. Free cash flow
provides management and investors a valuable measure to determine
the quantity of capital generated that can be deployed to create
additional shareholder value by a variety of means. Non-GAAP
financial measures are not in accordance with, or an alternative
for, measures of financial performance prepared in accordance with
GAAP and may be different from non-GAAP measures used by other
companies. Non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with Allscripts results of
operations as determined in accordance with GAAP. Investors and
potential investors are encouraged to review the definitions and
reconciliations of non-GAAP financial measures with GAAP financial
measures contained within the attached condensed consolidated
financial statements.
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