Form 10-Q ALLSCRIPTS HEALTHCARE For: Mar 31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, Zip Code)
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol |
Name of Each Exchange on which Registered |
(Nasdaq Global Select Market) |
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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.
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).
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.
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Emerging growth company |
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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
As of May 2, 2022, there were
1
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
FORM 10-Q
For the Fiscal Quarter Ended March 31, 2022
TABLE OF CONTENTS
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3 |
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Item 1. |
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3 |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
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Item 3. |
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37 |
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Item 4. |
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37 |
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37 |
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Item 1. |
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37 |
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Item 1A. |
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37 |
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Item 2. |
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37 |
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Item 6. |
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38 |
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39 |
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2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts) |
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March 31, 2022 |
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December 31, 2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowance of $ |
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Contract assets, net of allowance of $ |
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Prepaid expenses and other current assets |
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Assets held for sale |
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Total current assets |
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Fixed assets, net |
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Software development costs, net |
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Intangible assets, net |
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Goodwill |
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Deferred taxes, net |
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Contract assets - long-term, net of allowance of $ |
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Right-of-use assets - operating leases |
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Other assets |
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Total assets |
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$ |
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$ |
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3
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
(In thousands, except per share amounts) |
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March 31, 2022 |
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December 31, 2021 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Accrued compensation and benefits |
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Deferred revenue |
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Current operating lease liabilities |
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Liabilities related to assets held for sale |
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Total current liabilities |
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Long-term debt |
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Deferred revenue |
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Deferred taxes, net |
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Long-term operating lease liabilities |
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Other liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock: $ |
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Common stock: $ |
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Treasury stock: at cost, |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended March 31, |
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(In thousands, except per share amounts) |
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2022 |
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2021 |
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Revenue: |
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Provider |
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$ |
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$ |
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Payer & Life Sciences |
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Total revenue |
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Cost of revenue: |
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Provider |
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Payer & Life Sciences |
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Total cost of revenue |
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Gross profit |
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Selling, general and administrative expenses |
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Research and development |
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Amortization of intangible and acquisition-related assets |
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Income from operations |
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Interest expense |
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Other income, net |
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Equity in net (loss) income of unconsolidated investments |
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Income from continuing operations before income taxes |
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Income tax benefit (provision) |
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Income from continuing operations, net of tax |
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(Loss) income from discontinued operations |
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Gain on sale of discontinued operations |
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Income tax effect on discontinued operations |
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Income from discontinued operations, net of tax |
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Net income |
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$ |
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$ |
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Net income per share: |
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Basic |
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Continuing operations |
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$ |
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$ |
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Discontinued operations |
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Net income per share - Basic |
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$ |
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$ |
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Diluted |
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Continuing operations |
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$ |
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$ |
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Discontinued operations |
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Net income per share - Diluted |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
5
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
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Three Months Ended March 31, |
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(In thousands) |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
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Change in fair value of derivatives qualifying as cash flow hedges |
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Other comprehensive (loss) income before income tax benefit |
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( |
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Income tax benefit related to items in other comprehensive income (loss) |
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Total other comprehensive income (loss) |
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Comprehensive income |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
6
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
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Three Months Ended March 31, |
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(In thousands) |
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2022 |
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2021 |
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Number of common shares |
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Balance at beginning of period |
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Common stock issued under stock compensation plans, |
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Balance at end of period |
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Common stock |
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Balance at beginning of period |
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$ |
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$ |
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Common stock issued under stock compensation plans, |
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Balance at end of period |
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$ |
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$ |
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Number of treasury stock shares |
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Balance at beginning of period |
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( |
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Purchase of treasury stock |
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( |
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Balance at end of period |
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( |
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( |
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Treasury stock |
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Balance at beginning of period |
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$ |
( |
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$ |
( |
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Purchase of treasury stock |
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( |
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Balance at end of period |
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$ |
( |
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$ |
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Additional paid-in capital |
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Balance at beginning of period |
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$ |
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$ |
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Stock-based compensation |
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Common stock issued under stock compensation plans, |
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( |
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( |
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ASU 2020-06 implementation adjustments |
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( |
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Warrants issued |
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Balance at end of period |
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$ |
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$ |
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Retained earnings |
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Balance at beginning of period |
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$ |
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$ |
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Net income |
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ASU 2020-06 implementation adjustments |
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Balance at end of period |
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$ |
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$ |
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Accumulated other comprehensive loss |
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Balance at beginning of period |
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$ |
( |
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$ |
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Foreign currency translation adjustments, net |
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( |
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Unrecognized gain (loss) on derivatives qualifying as cash flow hedges, net of tax |
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( |
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( |
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Balance at end of period |
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$ |
( |
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$ |
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Total Stockholders’ Equity at beginning of period |
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$ |
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$ |
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Total Stockholders’ Equity at end of period |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
7
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended March 31, |
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(In thousands) |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Less: Income from discontinued operations |
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Income from continuing operations |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Non-cash lease expense, net |
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( |
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Stock-based compensation expense |
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Deferred taxes |
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( |
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Equity in net loss (income) of unconsolidated investments |
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( |
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Other loss, net |
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Changes in operating assets and liabilities (net of businesses acquired): |
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Accounts receivable and contract assets, net |
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Prepaid expenses and other assets |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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Accrued compensation and benefits |
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( |
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( |
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Deferred revenue |
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( |
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Other liabilities |
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Net cash provided by operating activities - continuing operations |
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Net cash provided by (used in) operating activities - discontinued operations |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
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( |
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Capitalized software |
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( |
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Cash paid for business acquisitions, net of cash acquired |
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( |
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Sale of businesses and other investments, net of cash divested, and distributions received |
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Purchases of equity securities, other investments and related intangible assets, net |
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( |
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Net cash used in investing activities - continuing operations |
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( |
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( |
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Net cash used in investing activities - discontinued operations |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Taxes paid related to net share settlement of equity awards |
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( |
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( |
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Credit facility payments |
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( |
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Credit facility borrowings, net of issuance costs |
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Repurchase of common stock |
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( |
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Intercompany to/from parent/subsidiaries |
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Payment of acquisition and other financing obligations |
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( |
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Net cash (used in) provided by financing activities - continuing operations |
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( |
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Net cash used in financing activities - discontinued operations |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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Less: Cash and cash equivalents and restricted cash included in current assets held for sale |
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( |
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( |
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Cash, cash equivalents and restricted cash, end of period, excluding current assets held for sale |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
8
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Allscripts Healthcare Solutions, Inc. (“Allscripts”) and its wholly-owned subsidiaries and controlled affiliates. All significant intercompany balances and transactions have been eliminated. Each of the terms “we,” “us,” “our” or the “Company” as used herein refers collectively to Allscripts Healthcare Solutions, Inc. and its wholly-owned subsidiaries and controlled affiliates, unless otherwise stated.
Unaudited Interim Financial Information
The unaudited interim consolidated financial statements as of and for the three months ended March 31, 2022 and 2021 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These interim consolidated financial statements are unaudited and, in the opinion of our management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly the consolidated financial statements for the periods presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The consolidated results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the SEC's rules and regulations for interim reporting. The Company believes that the disclosures made are adequate to make these unaudited interim consolidated financial statements not misleading. They should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (our “Form 10-K”).
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Our estimates and assumptions consider the economic implications of COVID-19 on our critical and significant accounting estimates. Actual results could differ materially from these estimates.
Significant Accounting Policies
There have been no changes to our significant accounting policies from those disclosed in our Form 10-K.
Recently Adopted Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also requires the application of the if-converted method for calculating diluted earnings per share, whereas the treasury stock method is no longer permitted for convertible instruments. The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years, beginning after December 15, 2021. We adopted ASU 2020-06 on
Accounting Pronouncements Not Yet Adopted
In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”), which requires contract assets and contract liabilities (deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers”, as if it had originated the contracts. The new guidance creates an exception to the general recognition and measurement principles of ASC 805, “Business Combinations”. The new standard should be applied prospectively and is effective for all public business entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The standard is effective for all other entities for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the effects of the adoption of ASU 2021-08 on our consolidated financial statements.
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We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, will have a material impact on our consolidated financial statements.
2. Revenue from Contracts with Customers
Our
At March 31, 2022 and December 31, 2021, we had capitalized costs to obtain or fulfill a contract of $
The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable, contract assets and customer advances and deposits. Accounts receivable, net includes both billed and unbilled amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets include amounts where revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time. Deferred revenue includes advanced payments and billings in excess of revenue recognized. Our contract assets and deferred revenue are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term based on the timing of when we expect to complete the related performance obligations and bill the customer. Deferred revenue is classified as current or long-term based on the timing of when we expect to recognize revenue.
The breakdown of revenue recognized based on the origination of performance obligations and elected accounting expedients is presented in the tables below:
(In thousands) |
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Three Months |
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Revenue related to deferred revenue balance at beginning of period |
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$ |
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Revenue related to new performance obligations satisfied during the period |
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Revenue recognized under "right-to-invoice" expedient |
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Reimbursed travel expenses, shipping and other revenue |
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Total revenue |
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$ |
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(In thousands) |
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Three Months |
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Revenue related to deferred revenue balance at beginning of period |
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$ |
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Revenue related to new performance obligations satisfied during the period |
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Revenue recognized under "right-to-invoice" expedient |
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Reimbursed travel expenses, shipping and other revenue |
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Total revenue |
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$ |
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The aggregate amount of contract transaction price related to remaining unsatisfied performance obligations represents contracted revenue that has not yet been recognized and includes both deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Total unsatisfied performance obligations equaled $
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Revenue Recognition
We recognize revenue only when we satisfy an identified performance obligation (or bundle of obligations) by transferring control of a promised product or service to a customer. We consider a product or service to be transferred when a customer obtains control because a customer has sole possession of the right to use (or the right to direct the use of) the product or service for the remainder of its economic life or to consume the product or service in its own operations. We evaluate the transfer of control primarily from the customer’s perspective as this reduces the risk that revenue is recognized for activities that do not transfer control to the customer.
The majority of our revenue is recognized over time because a customer continuously and simultaneously receives and consumes the benefits of our performance. The exceptions to this pattern are our sales of perpetual and term software licenses, and hardware, where we determined that a customer obtains control of the asset upon granting of access, delivery or shipment.
We disaggregate our revenue from contracts with customers based on the type of revenue and nature of revenue stream, as we believe those categories best depict how the nature, amount and uncertainty of our revenue and cash flows are affected by economic factors.
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Three Months Ended March 31, 2022 |
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