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mdrx-10q_20210930.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 September 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 November 1, 2021, there were 122,572,462 shares of the registrant's $0.01 par value common stock outstanding.

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended September 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	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	42
SIGNATURES		43

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	214,179	$	531,104
Restricted cash		2,141		6,361
Accounts receivable, net of allowance of $30,022 and $31,596 as of September 30, 2021 and December 31, 2020, respectively		340,924		347,355
Contract assets, net of allowance of $1,068 as of September 30, 2021 and December 31, 2020		123,244		106,717
Income tax receivable		0		25,421
Prepaid expenses and other current assets		124,473		136,264
Total current assets		804,961		1,153,222
Fixed assets, net		53,667		72,162
Software development costs, net		176,721		193,202
Intangible assets, net		248,408		286,602
Goodwill		974,427		974,729
Deferred taxes, net		6,118		5,790
Contract assets - long-term, net of allowance of $4,273 as of September 30, 2021 and December 31, 2020		51,119		43,682
Right-of-use assets - operating leases		70,297		96,601
Other assets		98,588		91,628
Total assets	$	2,484,306	$	2,917,618

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)	September 30, 2021			December 31, 2020
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	21,801		$	35,905
Accrued expenses		93,546			100,262
Accrued compensation and benefits		92,737			118,771
Deferred revenue		337,884			334,764
Current operating lease liabilities		19,264			22,264
Current liabilities attributable to discontinued operations		1,708			322,811
Total current liabilities		566,940			934,777
Long-term debt		373,187			167,587
Deferred revenue		4,538			3,471
Deferred taxes, net		16,494			18,186
Long-term operating lease liabilities		67,057			93,463
Other liabilities		37,503			33,891
Total liabilities		1,065,719			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 September 30, 2021 and December 31, 2020		0			0
Common stock: $0.01 par value, 349,000 shares authorized as of September 30, 2021 and December 31, 2020; 276,697 and 122,570 shares issued and outstanding as of September 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, 154,126 and 134,616 shares as of September 30, 2021 and December 31, 2020, respectively		(1,213,315	)		(870,558	)
Additional paid-in capital		1,952,097			1,902,776
Retained earnings		680,281			633,118
Accumulated other comprehensive loss		(3,242	)		(1,838	)
Total stockholders’ equity		1,418,587			1,666,243
Total liabilities and stockholders’ equity	$	2,484,306		$	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 September 30,						Nine Months Ended September 30,
(In thousands, except per share amounts)	2021			2020			2021			2020
Revenue:
Software delivery, support and maintenance	$	222,726		$	219,850		$	670,840		$	680,124
Client services		146,546			145,768			440,498			436,162
Total revenue		369,272			365,618			1,111,338			1,116,286
Cost of revenue:
Software delivery, support and maintenance		68,462			72,411			208,496			216,625
Client services		122,142			127,361			362,826			406,752
Amortization of software development and acquisition-related assets		29,894			30,708			89,444			88,237
Total cost of revenue		220,498			230,480			660,766			711,614
Gross profit		148,774			135,138			450,572			404,672
Selling, general and administrative expenses		78,794			93,442			239,592			296,164
Research and development		45,540			46,352			145,932			151,774
Asset impairment charges		6,519			210			11,763			210
Amortization of intangible and acquisition-related assets		5,817			6,295			17,466			19,326
Income (loss) from operations		12,104			(11,161	)		35,819			(62,802	)
Interest expense		(3,617	)		(6,667	)		(9,709	)		(27,646	)
Other income, net		4,700			398			22,494			45
Gain on sale of businesses, net		8,363			0			8,363			0
Impairment of long-term investments		0			(1,025	)		0			(1,575	)
Equity in net (loss) income of unconsolidated investments		(257	)		383			(321	)		17,417
Income (loss) from continuing operations before income taxes		21,293			(18,072	)		56,646			(74,561	)
Income tax (provision) benefit		(5,099	)		4,116			(9,954	)		6,641
Income (loss) from continuing operations, net of tax		16,194			(13,956	)		46,692			(67,920	)
(Loss) income from discontinued operations		(14	)		19,545			(7	)		54,601
Gain on sale of discontinued operations		0			0			647			0
Income tax effect on discontinued operations		0			(5,047	)		(169	)		(14,098	)
(Loss) income from discontinued operations, net of tax		(14	)		14,498			471			40,503
Net income (loss)	$	16,180		$	542		$	47,163		$	(27,417	)

Net income (loss) per share:
Basic
Continuing operations	$	0.13		$	(0.09	)	$	0.35		$	(0.42	)
Discontinued operations		0.00			0.09			0.00			0.25
Net income (loss) per share - Basic	$	0.13		$	0.00		$	0.35		$	(0.17	)

Diluted
Continuing operations	$	0.12		$	(0.09	)	$	0.33		$	(0.42	)
Discontinued operations		0.00			0.09			0.00			0.25
Net income (loss) per share - Diluted	$	0.12		$	0.00		$	0.33		$	(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 September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021			2020
Net income (loss)	$	16,180		$	542		$	47,163		$	(27,417	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(805	)		983			(285	)		(611	)
Change in fair value of derivatives qualifying as cash flow hedges		0			1,009			(1,509	)		1,620
Other comprehensive (loss) income before income tax benefit		(805	)		1,992			(1,794	)		1,009
Income tax benefit related to items in other comprehensive income (loss)		0			(260	)		390			(418	)
Total other comprehensive income (loss)		(805	)		1,732			(1,404	)		591
Comprehensive income (loss)	$	15,375		$	2,274		$	45,759		$	(26,826	)

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 September 30,						Nine Months Ended September 30,
(In thousands)	2021			2020			2021			2020
Number of common shares
Balance at beginning of period		276,668			274,463			274,558			272,609
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		29			8			2,139			1,862
Balance at end of period		276,697			274,471			276,697			274,471
Common stock
Balance at beginning of period	$	2,766		$	2,743		$	2,745		$	2,725
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		0			1			21			19
Balance at end of period	$	2,766		$	2,744		$	2,766		$	2,744
Number of treasury stock shares
Balance at beginning of period		(151,657	)		(111,493	)		(134,616	)		(110,134	)
Issuance of treasury stock		0			0			33			90
Purchase of treasury stock		0			(5,000	)		(6,397	)		(6,449	)
Accelerated share repurchase program		(2,469	)		0			(13,146	)		0
Balance at end of period		(154,126	)		(116,493	)		(154,126	)		(116,493	)
Treasury stock
Balance at beginning of period	$	(1,174,498	)	$	(579,678	)	$	(870,558	)	$	(571,157	)
Issuance of treasury stock		0			0			465			1,193
Purchase of treasury stock		0			(45,568	)