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mdrx-10q_20210630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35547

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

36-4392754

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

222 Merchandise Mart, Suite 2024

Chicago, IL 60654

(Address of Principal Executive Offices, Zip Code)

(800) 334-8534

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Stock, par value $0.01 per share

MDRX

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2021, there were 125,010,868 shares of the registrant's $0.01 par value common stock outstanding.

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended June 30, 2021

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II. OTHER INFORMATION		38
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 5.	Other Information	40
Item 6.	Exhibits	40
SIGNATURES		41

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	229,254	$	531,104
Restricted cash		2,129		6,361
Accounts receivable, net of allowance of $31,991 and $31,596 as of June 30, 2021 and December 31, 2020, respectively		338,587		347,355
Contract assets, net of allowance of $1,068 as of June 30, 2021 and December 31, 2020		120,051		106,717
Income tax receivable		0		25,421
Prepaid expenses and other current assets		150,968		136,264
Total current assets		840,989		1,153,222
Fixed assets, net		59,077		72,162
Software development costs, net		182,848		193,202
Intangible assets, net		261,258		286,602
Goodwill		974,834		974,729
Deferred taxes, net		5,872		5,790
Contract assets - long-term, net of allowance of $4,273 as of June 30, 2021 and December 31, 2020		49,849		43,682
Right-of-use assets - operating leases		75,052		96,601
Other assets		90,521		91,628
Total assets	$	2,540,300	$	2,917,618

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)	June 30, 2021			December 31, 2020
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	26,782		$	35,905
Accrued expenses		88,780			100,262
Accrued compensation and benefits		94,185			118,771
Deferred revenue		364,000			334,764
Current operating lease liabilities		19,662			22,264
Current liabilities attributable to discontinued operations		2,670			322,811
Total current liabilities		596,079			934,777
Long-term debt		421,312			167,587
Deferred revenue		2,862			3,471
Deferred taxes, net		17,797			18,186
Long-term operating lease liabilities		71,597			93,463
Other liabilities		37,179			33,891
Total liabilities		1,146,826			1,251,375
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.01 par value, 1,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and December 31, 2020		0			0
Common stock: $0.01 par value, 349,000 shares authorized as of June 30, 2021 and December 31, 2020; 276,668 and 125,011 shares issued and outstanding as of June 30, 2021, respectively; 274,558 and 139,942 shares issued and outstanding as of December 31, 2020, respectively		2,766			2,745
Treasury stock: at cost, 151,657 and 134,616 shares as of June 30, 2021 and December 31, 2020, respectively		(1,174,498	)		(870,558	)
Additional paid-in capital		1,903,542			1,902,776
Retained earnings		664,101			633,118
Accumulated other comprehensive loss		(2,437	)		(1,838	)
Total stockholders’ equity		1,393,474			1,666,243
Total liabilities and stockholders’ equity	$	2,540,300		$	2,917,618

The accompanying notes are an integral part of these consolidated financial statements.

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2021			2020			2021			2020
Revenue:
Software delivery, support and maintenance	$	219,610		$	223,591		$	442,301		$	455,731
Client services		154,104			145,713			299,765			294,937
Total revenue		373,714			369,304			742,066			750,668
Cost of revenue:
Software delivery, support and maintenance		69,303			71,130			140,034			144,214
Client services		122,597			131,171			240,684			279,391
Amortization of software development and acquisition-related assets		30,061			29,405			59,550			57,529
Total cost of revenue		221,961			231,706			440,268			481,134
Gross profit		151,753			137,598			301,798			269,534
Selling, general and administrative expenses		79,090			109,897			160,798			202,722
Research and development		51,219			46,045			100,392			105,422
Asset impairment charges		5,244			0			5,244			0
Amortization of intangible and acquisition-related assets		5,825			6,321			11,649			13,031
Income (loss) from operations		10,375			(24,665	)		23,715			(51,641	)
Interest expense		(2,949	)		(10,314	)		(6,092	)		(20,979	)
Other income (loss), net		16,757			(875	)		17,794			(353	)
Impairment of long-term investments		0			(550	)		0			(550	)
Equity in net (loss) income of unconsolidated investments		(86	)		16,834			(64	)		17,034
Income (loss) from continuing operations before income taxes		24,097			(19,570	)		35,353			(56,489	)
Income tax (provision) benefit		(2,192	)		(2,009	)		(4,855	)		2,525
Income (loss) from continuing operations, net of tax		21,905			(21,579	)		30,498			(53,964	)
Income from discontinued operations		36			18,838			7			35,056
Gain on sale of discontinued operations		0			0			647			0
Income tax effect on discontinued operations		(15	)		(4,864	)		(169	)		(9,051	)
Income from discontinued operations, net of tax		21			13,974			485			26,005
Net income (loss)	$	21,926		$	(7,605	)	$	30,983		$	(27,959	)

Net income (loss) per share:
Basic
Continuing operations	$	0.16		$	(0.13	)	$	0.22		$	(0.33	)
Discontinued operations		0.00			0.08			0.00			0.16
Net income (loss) per share - Basic	$	0.16		$	(0.05	)	$	0.22		$	(0.17	)

Diluted
Continuing operations	$	0.15		$	(0.13	)	$	0.21		$	(0.33	)
Discontinued operations		0.00			0.08			0.00			0.16
Net income (loss) per share - Diluted	$	0.15		$	(0.05	)	$	0.21		$	(0.17	)

The accompanying notes are an integral part of these consolidated financial statements.

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2021			2020			2021			2020
Net income (loss)	$	21,926		$	(7,605	)	$	30,983		$	(27,959	)
Other comprehensive income (loss):
Foreign currency translation adjustments		421			918			520			(1,594	)
Change in fair value of derivatives qualifying as cash flow hedges		(828	)		1,084			(1,509	)		611
Other comprehensive income (loss) before income tax benefit		(407	)		2,002			(989	)		(983	)
Income tax benefit related to items in other comprehensive income (loss)		214			(280	)		390			(158	)
Total other comprehensive income (loss)		(193	)		1,722			(599	)		(1,141	)
Comprehensive income (loss)	$	21,733		$	(5,883	)	$	30,384		$	(29,100	)

The accompanying notes are an integral part of these consolidated financial statements.

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2021			2020			2021			2020
Number of common shares
Balance at beginning of period		275,241			273,484			274,558			272,609
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		1,427			979			2,110			1,854
Balance at end of period		276,668			274,463			276,668			274,463
Common stock
Balance at beginning of period	$	2,751		$	2,733		$	2,745		$	2,725
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		15			10			21			18
Balance at end of period	$	2,766		$	2,743		$	2,766		$	2,743
Number of treasury stock shares
Balance at beginning of period		(134,616	)		(111,583	)		(134,616	)		(110,134	)
Issuance of treasury stock		33			90			33			90
Purchase of treasury stock		(6,397	)		0			(6,397	)		(1,449	)
Accelerated share repurchase program		(10,677	)		0			(10,677	)		0
Balance at end of period		(151,657	)		(111,493	)		(151,657	)		(111,493	)
Treasury stock
Balance at beginning of period	$	(870,558	)	$	(580,871	)	$	(870,558	)	$	(571,157	)
Issuance of treasury stock		465			1,193			465			1,193
Purchase of treasury stock		(108,953	)		0			(108,953	)		(9,714	)
Accelerated share repurchase program		(195,452	)		0			(195,452	)		0
Balance at end of period	$	(1,174,498	)	$	(579,678