UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 8, 2009
ALLSCRIPTS-MISYS HEALTHCARE SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 000-32085 | 36-4392754 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
222 Merchandise Mart Plaza, Suite 2024, Chicago, Illinois 60654
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (866) 358-6869
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On January 8, 2009, Allscripts-Misys Healthcare Solutions, Inc. announced its earnings for the three and six months ended November 30, 2008. Further details are described in the press release issued by the registrant on January 8, 2009, and furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The information contained in, or incorporated into, this Item 2.02, including Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| Exhibit No. |
||
| Exhibit 99.1 | Press Release dated January 8, 2009 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ALLSCRIPTS-MISYS HEALTHCARE SOLUTIONS, INC. | ||||||
| Date: January 8, 2009 |
By: | /s/ William J. Davis | ||||
| William J. Davis | ||||||
| Chief Financial Officer | ||||||
EXHIBIT INDEX
| Exhibit No. |
||
| Exhibit 99.1 | Press Release dated January 8, 2009 |
EXHIBIT 99.1
FOR RELEASE AT 4:00 P.M. EASTERN STANDARD TIME, JANUARY 8, 2009
Allscripts Reports Fiscal 2009 Second Quarter Results
Results Reflect Early Success of Merger with Misys Healthcare Creating Clear Leader in Physician Healthcare IT
CHICAGO – January 8, 2009 – Allscripts-Misys Healthcare Solutions, Inc., formerly Allscripts Healthcare Solutions, Inc. (Allscripts or the Company), today announced its financial results for the three and six months ended November 30, 2008.
The Company’s results for the three and six months ended November 30, 2008 include results from legacy Allscripts for the period of October 11, 2008 through November 30, 2008, and from Misys Healthcare Systems, LLC for all periods presented. A subsidiary of Allscripts merged with Misys Healthcare Systems (MHS), formerly a division of Misys plc, on October 10, 2008, at which time the Company changed its name to Allscripts-Misys Healthcare Solutions, Inc. and adopted a new fiscal reporting year of May 31st to conform with the fiscal year of Misys plc.
Total revenue for the three months ended November 30, 2008 was $128.6 million, compared to $96.4 million for the same period last year. Non-GAAP revenue for the three months ended November 30, 2008 was $173.3 million, compared to non-GAAP revenue of $166.1 million for the same period last year. Non-GAAP revenue for the three months ended November 30, 2008 and 2007 are comprised of revenue from Allscripts and MHS for the full three-month period of each respective year, giving effect to the add-back of a deferred revenue adjustment of $2.1 million recorded for GAAP purposes in the three month period ended November 30, 2008. Total GAAP revenue for software and related services during the three months ended November 30, 2008 was $123.9 million, compared to $96.4 million for the same period last year. Non-GAAP revenue for software and related services for the three months ended November 30, 2008 and 2007 was $163.3 million and $154.2 million, respectively, a 6% increase. Please see “Explanation of Non-GAAP Financial Measures” below for a discussion of non-GAAP measures.
Gross margin percentage was 51.9% for the second quarter of fiscal 2009, compared to 55.9% during the second quarter of fiscal 2008. Based on non-GAAP revenue for each respective quarter, gross margin percentage was 52.9% for the second quarter of fiscal 2009, compared to 53.3% during the second quarter of fiscal 2008.
Net income (loss) for the three months ended November 30, 2008 was ($6.0) million compared to net income of $5.5 million for the same period last year.
Non-GAAP net income for the three months ended November 30, 2008 was $16.8 million, compared to non-GAAP net income of $15.9 million for the same period last year. Non-GAAP net income for the three months ended November 30, 2008 and 2007 are comprised of net income giving effect to the add-back of legacy Allscripts net income for respective periods prior to the consummation date of the merger of $4.9 million and $5.5 million, respectively, net of tax, acquisition-related amortization of $2.7 million and $4.7 million, respectively, net of tax, total stock-based compensation expense of $0.6 million and $1.2 million, respectively, net of tax, and transaction-related expenses of $13.3 million and $1.1 million, net of tax. Non-GAAP net income for the three months ended November 30, 2008 also gives effect to the deferred revenue adjustment of $1.3 million, net of tax and non-GAAP net income for the three months ended November 30, 2007 also gives effect to the tax adjustment of ($2.1) million, net of tax.
As of November 30, 2008, the Company had cash and marketable securities of $77.1 million.
“Our results this quarter reflect the early success of the merger of Allscripts and Misys Healthcare and our solid operating performance as a company,” said Glen Tullman, Chief Executive Officer of Allscripts. “We expect the Obama Administration’s focus on healthcare information technology to drive exciting new opportunities, and we continue to believe that Allscripts is in the right place at the right time, with the right solutions to make the most of the opportunity.”
Total revenue for the six months ended November 30, 2008 was $221.4 million, compared to $189.6 million for the six months ended November 30, 2007. Non-GAAP revenue for the six months ended November 30, 2008 was $347.9 million, compared to non-GAAP revenue of $329.1 million for the same period last year. Non-GAAP revenue for the six months ended November 30, 2008 and 2007 are comprised of revenue from Allscripts and MHS for the first six months of each respective year giving effect to the add-back of a deferred revenue adjustment of $2.1 million recorded for GAAP purposes in the six month period ended November 30, 2008. Total GAAP revenue for software and related services during the six months ended November 30, 2008 was $216.7 million, compared to $189.6 million for the same period last year. Non-GAAP revenue for software and related services for the six months ended November 30, 2008 and 2007 was $327.9 million and $306.3 million, respectively, a 7% increase.
Gross margin percentage was 52.7% for the six months ended November 30, 2008, compared to 54.6% for the comparable period a year ago. Based on non-GAAP revenue for each respective six-month period, gross margin percentage was 52.4% for the first six months of fiscal 2009, compared to 52.9% during the first six months of fiscal 2008.
Net income (loss) for the six months ended November 30, 2008 was ($0.6) million compared to net income of $4.4 million, for the same period last year.
Non-GAAP net income for the six months ended November 30, 2008 was $32.2 million compared to non-GAAP net income of $27.2 million for the same period last year. Non-GAAP net income for the six months ended November 30, 2008 and 2007 is comprised of net income giving effect to the add-back of Allscripts net income for respective periods prior to the consummation date of the merger of $6.7 million and $9.6 million, respectively, net of tax, acquisition-related amortization of $5.2 million and $9.7 million, respectively, net of tax, total stock-based compensation expense of $2.1 million and $2.7 million, respectively, net of tax, and transaction-related expenses of $17.5 million and $2.8 million, net of tax. Non-GAAP net income for the six months ended November 30, 2008 also gives effect to the deferred revenue adjustment of $1.3 million, net of tax, and non-GAAP net income for the six months ended November 30, 2007 also gives effect to the tax adjustment of ($2.0) million, net of tax.
Allscripts will conduct a conference call on Thursday, January 8, 2009 at 4:30 PM Eastern Time. The conference call can be accessed via the Internet at www.allscripts.com, or by dialing (800) 374-1376 and requesting the Allscripts earnings call. A Microsoft Windows Media Player web replay will be available three hours after the conclusion of the call for a period of two weeks at www.allscripts.com or by calling (800) 642-1687, ID # 77297201.
Explanation of Non-GAAP Financial Measures
Allscripts reports its financial results in accordance with generally accepted accounting principles, or GAAP. To supplement this information, Allscripts presents in this press release non-GAAP revenue and net income, which are non-GAAP financial measures under Section 101 of Regulation G under the Securities Exchange Act of 1934, as amended. Non-GAAP revenue consists of GAAP revenue but then includes legacy Allscripts revenue for periods prior to the consummation date of the merger and adds-back the deferred revenue adjustment booked for GAAP purposes. Non-GAAP net income consists of
GAAP net income but then includes legacy Allscripts net income for periods prior to the consummation date of the merger, adds-back the deferred revenue adjustment and excludes acquisition-related amortization, stock-based compensation expense under SFAS No. 123R, and transaction-related expenses, in each case net of any related tax benefit.
| • | Deferred Revenue Adjustment. Deferred revenue adjustment reflects the fair value adjustment to deferred revenues acquired in connection with the transactions consummated with Misys on October 10, 2008. The fair value of deferred revenue represents an amount equivalent to the estimated cost plus an appropriate profit margin, to perform services related to legacy Allscripts’ software and product support, which assumes a legal obligation to do so, based on the deferred revenue balances as of October 10, 2008. Allscripts adds back deferred revenue adjustment for non-GAAP revenue and non-GAAP net income because it believes the amount directly correlates to the underlying performance of Allscripts’ operations. |
| • | Acquisition-Related Amortization. Acquisition-related amortization expense is a non-cash expense arising from the acquisition of intangible assets in connection with acquisitions or investments. Allscripts excludes acquisition-related amortization expense from 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 as a result 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 should also note that such 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 awards to employees. Allscripts excludes stock-based compensation expense from 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 as a result of the timing 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 should also note that such expense will recur in future periods. |
| • | Transaction-Related Expenses. Transaction-related expenses are fees and expenses, including legal, investment banking and accounting fees, incurred in connection with announced transactions. Allscripts excludes transaction-related expenses from 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. |
Management also believes that non-GAAP revenue and net income provide useful supplemental information to management and investors regarding the underlying performance of the Company’s business operations and facilitates comparisons to our historical operating results. Management also uses this information internally for forecasting and budgeting as it believes that the measure is indicative of the Company’s core operating results. Note however, that non-GAAP revenue and net income are performance measures only, and they do not provide any measure of the Company’s cash flow or liquidity. 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 reconciliation of non-GAAP financial measures with GAAP financial measures contained within the attached condensed consolidated financial statements.
RECONCILIATION.
About Allscripts
Allscripts (NASDAQ: MDRX) uses innovation technology to bring health to healthcare. More than 150,000 physicians, 700 hospitals and nearly 7,000 post-acute and homecare organizations utilize Allscripts to improve the health of their patients and their bottom line. The company’s award-winning solutions include electronic health records, electronic prescribing, revenue cycle management, practice management, document management, medication services, hospital care management, emergency department information systems and homecare automation. Allscripts is the brand name of Allscripts-Misys Healthcare Solutions, Inc. To learn more, visit www.allscripts.com.
This news release may contain forward-looking statements within the meaning of the federal securities laws. Statements regarding future events, developments, the Company’s future performance, as well as management’s expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties, some of which are outlined below. As a result, actual results may vary materially from those anticipated by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: the volume and timing of systems sales and installations; length of sales cycles and the installation process; the possibility that products will not achieve or sustain market acceptance; the timing, cost and success or failure of new product and service introductions, development and product upgrade releases; competitive pressures including product offerings, pricing and promotional activities; our ability to establish and maintain strategic relationships; undetected errors or similar problems in our software products; compliance with existing laws, regulations and industry initiatives and future changes in laws or regulations in the healthcare industry; possible regulation of the Company’s software by the U.S. Food and Drug Administration; the possibility of product-related liabilities; our ability to attract and retain qualified personnel; our ability to identify and complete acquisitions, manage our growth and integrate acquisitions; the ability to recognize the benefits of the merger with Misys Healthcare Systems, LLC (“MHS”); the integration of MHS with the Company and the possible disruption of current plans and operations as a result thereof; maintaining our intellectual property rights and litigation involving intellectual property rights; risks related to third-party suppliers; our ability to obtain, use or successfully integrate third-party licensed technology; breach of our security by third parties; and the risk factors detailed from time to time in our reports filed with the Securities and Exchange Commission, including our 2007 Annual Report on Form 10-K available through the Web site maintained by the Securities and Exchange Commission at www.sec.gov. The Company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
Allscripts Contacts:
Dan Michelson
Chief Marketing Officer
312-506-1217
dan.michelson@allscripts.com
Todd Stein
Senior Manager/Public Relations
312-506-1216
todd.stein@allscripts.com
Bill Davis
Chief Financial Officer
312-506-1211
bill.davis@allscripts.com
Allscripts-Misys Healthcare Solutions, Inc.
Condensed Consolidated Balance Sheets
(amounts in millions)
| November 30, 2008 |
May 31, 2008 | |||
| (Unaudited) | ||||
| Assets | ||||
| Current Assets |
||||
| Cash and Cash Equivalents |
$68.9 | $0.3 | ||
| Marketable Securities |
5.5 | — | ||
| Accounts Receivable, Net |
148.0 | 48.3 | ||
| Deferred Income Tax Assets |
6.8 | 0.9 | ||
| Inventories, Net |
6.0 | 1.9 | ||
| Prepaid Expenses and Other Current Assets |
31.9 | 9.9 | ||
| Total Current Assets |
267.1 | 61.3 | ||
| Long-term Marketable Securities |
2.7 | — | ||
| Fixed Assets, Net |
18.8 | 6.1 | ||
| Software Development Costs, Net |
2.3 | — | ||
| Deferred Income Tax Assets |
— | 8.3 | ||
| Intangible Assets, Net |
244.4 | 8.6 | ||
| Goodwill, Net |
432.0 | 82.4 | ||
| Other Long-Term Assets |
14.0 | 12.6 | ||
| Total Assets | $981.3 | $179.3 | ||
| Liabilities | ||||
| Current Liabilities |
||||
| Accounts Payable |
$22.8 | $14.3 | ||
| Accrued Expenses |
46.2 | 12.6 | ||
| Accrued Compensation |
22.0 | 9.7 | ||
| Deferred Revenue |
66.0 | 27.2 | ||
| Current Portion of Long-term Debt, Line of Credit and Capital Lease Obligation |
1.0 | 4.3 | ||
| Total Current Liabilities |
158.0 | 68.1 | ||
| Long-Term Liabilities |
||||
| Long-term Debt |
77.9 | 0.6 | ||
| Deferred Income Tax Liabilities |
38.1 | — | ||
| Other Liabilities |
2.4 | — | ||
| Total Liabilities |
276.4 | 68.7 | ||
| Total Stockholders’ Equity |
704.9 | 110.6 | ||
| Total Liabilities and Stockholders’ Equity |
$981.3 | $179.3 | ||
Allscripts-Misys Healthcare Solutions, Inc.
Condensed Consolidated Statements of Operations
(amounts in millions, except per-share amounts)
(Unaudited)
| Three Months Ended November 30, |
Six Months Ended November 30, |
|||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Revenue |
||||||||||||
| System sales |
$20.8 | $16.7 | $33.8 | $31.3 | ||||||||
| Professional services |
11.8 | 7.9 | 19.2 | 15.0 | ||||||||
| Maintenance |
46.7 | 35.3 | 83.4 | 70.2 | ||||||||
| Transaction processing and other |
44.6 | 36.5 | 80.3 | 73.1 | ||||||||
| Prepackaged medications |
4.7 | — | 4.7 | — | ||||||||
| Total revenue |
128.6 | 96.4 | 221.4 | 189.6 | ||||||||
| Cost of revenue |
||||||||||||
| System sales |
11.7 | 8.5 | 19.4 | 16.2 | ||||||||
| Professional services |
11.9 | 6.5 | 18.3 | 13.1 | ||||||||
| Maintenance |
16.7 | 14.2 | 31.6 | 28.4 | ||||||||
| Transaction processing and other |
17.6 | 13.3 | 31.4 | 28.3 | ||||||||
| Prepackaged medications |
3.9 | — | 3.9 | — | ||||||||
| Total cost of revenue |
61.8 | 42.5 | 104.6 | 86.0 | ||||||||
| Gross profit |
66.8 | 53.9 | 116.8 | 103.6 | ||||||||
| Selling, general and administrative |
64.1 | 31.4 | 97.0 | 65.9 | ||||||||
| Research and development |
10.9 | 8.1 | 18.9 | 19.6 | ||||||||
| Amortization of intangibles |
1.3 | 5.5 | 1.5 | 10.9 | ||||||||
| Income (loss) from operations |
(9.5 | ) | 8.9 | (0.6 | ) | 7.2 | ||||||
| Interest expense |
(0.6 | ) | (0.1 | ) | (0.7 | ) | (0.1 | ) | ||||
| Interest income and other, net |
0.2 | — | 0.3 | — | ||||||||
| Net income (loss) before tax |
(9.9 | ) | 8.8 | (1.0 | ) | 7.1 | ||||||
| Income tax (provision) benefit |
3.9 | (3.3 | ) | 0.4 | (2.7 | ) | ||||||
| Net income (loss) |
($6.0 | ) | $5.5 | ($0.6 | ) | $4.4 | ||||||
| Net income (loss) per share - basic |
($0.05 | ) | $0.07 | ($0.01 | ) | $0.05 | ||||||
| Net income (loss) per share - diluted |
($0.05 | ) | $0.07 | ($0.01 | ) | $0.05 | ||||||
| Weighted average shares of common stock outstanding used in computing basic net income per share |
118.9 | 82.9 | 100.8 | 82.9 | ||||||||
| Weighted average shares of common stock outstanding used in computing diluted net income per share |
118.9 | 82.9 | 100.8 | 82.9 | ||||||||
Allscripts-Misys Healthcare Solutions, Inc.
Condensed Non-GAAP Financial Information
(amounts in millions, except per-share amounts)
(Unaudited)
| Non-GAAP Revenue | Three Months Ended November 30, |
Six Months Ended November 30, |
||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Software and related services revenue, as reported |
$123.9 | $96.4 | $216.7 | $189.6 | ||||||||
| AHS revenue pre-merger |
37.3 | 57.8 | 109.1 | 116.7 | ||||||||
| Deferred revenue adjustment |
2.1 | — | 2.1 | — | ||||||||
| Total non-GAAP software and related services revenue |
163.3 | 154.2 | 327.9 | 306.3 | ||||||||
| Prepackaged medications revenue, as reported |
4.7 | — | 4.7 | — | ||||||||
| AHS revenue pre-merger |
5.3 | 11.9 | 15.3 | 22.8 | ||||||||
| Total non-GAAP prepackaged medications revenue |
10.0 | 11.9 | 20.0 | 22.8 | ||||||||
| Total Non-GAAP Revenue | $173.3 | $166.1 | $347.9 | $329.1 | ||||||||
| Non-GAAP Net Income (All adjustments tax effected at 40% for fiscal 2009 and 39% for fiscal 2008) |
Three Months Ended November 30, |
Six Months Ended November 30, |
||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| Net income (loss), as reported |
($6.0 | ) | $5.5 | ($0.6 | ) | $4.4 | ||||||
| AHS net income pre-merger (A) |
4.9 | 5.5 | 6.7 | 9.6 | ||||||||
| Deferred revenue adjustment |
1.3 | — | 1.3 | — | ||||||||
| Stock-based compensation expense (A) |
0.6 | 1.2 | 2.1 | 2.7 | ||||||||
| Acquisition-related amortization expense |
2.7 | 4.7 | 5.2 | 9.7 | ||||||||
| Transaction-related expense |
13.3 | 1.1 | 17.5 | 2.8 | ||||||||
| Tax adjustment for fiscal 2008 to 39% |
— | (2.1 | ) | — | (2.0 | ) | ||||||
| Non-GAAP Net Income | $16.8 | $15.9 | $32.2 | $27.2 | ||||||||
| Weighted average shares of common stock outstanding used in computing diluted non-GAAP adjusted net income per share |
118.9 | 82.9 | 100.8 | 82.9 | ||||||||
| Non-GAAP Net Income Per Share - diluted | $0.14 | $0.19 | $0.32 | $0.33 | ||||||||
| (A) | Excludes $28.1M of transaction-related expenses, including $13.1M of stock-based compensation, incurred by AHS in the pre-merger period, net of tax. |