Will Allscripts Healthcare Solutions (MDRX) Miss Earnings Estimates? - Analyst Blog

Allscripts Healthcare Solutions, Inc. MDRX is set to report its first-quarter 2014 financial results after the market closes on May 8. In the last reported quarter, the company's earnings were in line with the Zacks Consensus Estimate. Allscripts delivered negative surprises in 3 of its last 4 quarters, with an average miss of 68.72%.  Let's see how things are shaping up for this announcement.

Factors at Play

Allscripts's earnings slumped 55.6% year over year to 4 cents per share in the fourth quarter of 2013. However, the bottom line was on par with the Zacks Consensus Estimate.

Revenues were flat at $351.0 million in the quarter but surpassed the Zacks Consensus Estimate of $343 million. However, considering deferred revenues and other adjustments, Allscripts experienced a 4% year-over-year drop in its adjusted total revenues to $353.6 million.

Category wise, adjusted system sales revenues remained flat compared to the prior year, due to significantly lower hardware revenues in the fourth quarter. Adjusted revenues from Allscripts' transaction processing and other category declined 2% on a year-over-year basis, as a result of the company's loss of an outsourcing client.

Allscripts' total bookings increased 51.6% year over year to $274 million in the reported quarter, with population Health Management solutions constituting 42% of total bookings compared to 26% in the prior-year quarter.

Apart from strong sales of Population Health Management solutions, wherein bookings increased almost 90% over last year, new wins in the core acute electronic health record markets for Sunrise and increasing wallet share within Allscripts' existing Acute and Ambulatory base also contributed to the impressive improvement in the quarter's bookings. Management believes that the 87% growth in its subscription bookings has helped the company build its backlog at present, and will definitely improve its long-term revenue visibility.

Allscripts' management provided guidance for adjusted revenues and adjusted EBITDA over the next 3 years. The company expects adjusted revenues to grow in the range of 5-8% and adjusted EBITDA to grow in the range of 18-22% over the next three years.

Earnings Whispers?

Our proven model does not conclusively show that Allscripts is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Expected Surprise Prediction or ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Allscripts has a Zacks ESP of 0.00%.

Zacks Rank: Allscripts's Zacks Rank #4 (Sell) when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Myriad Genetics Inc. MYGN, earnings ESP of +10.87% and a Zacks Rank #1 (Strong Buy).

LDR Holding Corporation LDRH, earnings ESP of +26.32% and a Zacks Rank #2 (Buy).

Allergan Inc. AGN, earnings ESP of +0.89% and a Zacks Rank #2.