Allscripts Healthcare Solutions Inc. (MDRX), a leading healthcare information technology corporation based in Chicago, provides electronic health records (EHR), information connection, private cloud hosting, outsourcing, analytics, patient access, and population health management solutions. The stock has gained 29.8% in price over the past nine months and 12.5% over the past month to close its last trading session at $20.55.

MDRX expects its revenue to be in the range of $390 million – $395 million. The company projects fiscal year 2021 GAAP operating income of between $70 million and $75 million, and adjusted EBITDA of between $295 million and $300 million, representing an increase from the prior outlook range of $275 million to $285 million

In addition, this month, the company’s board of directors approved a new share repurchase program under which MDRX may purchase up to $250 million of its common stock. The new program has no expiration date and replaces its existing authorization to purchase up to $350 million in common stock.

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Here is what could shape MDRX’s performance in the near term:

Positive Developments

In November, MDRX announced that Next Level Urgent Care had chosen Allscripts to increase connectivity, streamline EHR operations, and significantly advance analytics across its facilities. All Next Level Urgent Care facilities will use the Allscripts Touchworks platform and Microsoft Azure hosting and services.

In October, MDRX launched Guided Scheduling in Allscripts Practice Management, an artificial intelligence scheduling technology that optimizes physicians’ days by utilizing real-time provider, practice, and industry data. Set-up and configuration of Allscripts Guided Scheduling are meant to be simple by integrating this feature in the existing Allscripts Practice Management scheduling solution, allowing system users to have little disruption to their existing processes.

Robust Financials

During the third quarter, ended Sept. 30, 2021, MDRX’s total revenue increased marginally year-over-year to $369.2 million. Its operating income came in at $12, compared to an $11.1 million operating loss in the prior-year quarter. The company’s net income grew 3120% from the year-ago value to $16.1 million, while its EPS came in at $0.12 over this period.

Strong Profitability

MDRX’s 3.6% trailing-12-months EBIT margin is 55.9% higher than the 2.32% industry average. Also, its ROC, net income margin, and ROA came in at 1.6%, 51.7%, and 31.2%, respectively, compared to industry average of negative 18.4%, 1.5%, and 22.3%. Furthermore, its 0.53% asset turnover ratio is 53.1% higher than the 0.35% industry average.

Impressive Growth Prospects

The Street expects MDRX’s revenues and EPS to rise 2.6% and 4.3%, respectively, year-over-year to $1.53 billion and $0.97 in fiscal 2022. In addition, MDRX’s EPS is expected to rise at an 8% CAGR over the next five years. Furthermore, the company has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.

Discounted Valuation

In terms of forward Price/Book, the stock is currently trading at 2.76x, which is 12.5% lower than the 3.16x industry average. Also, its 1.84x forward EV/Sales is 61.5% lower than the 4.78x industry average. And MDRX’s 1.68x forward Price/Sales is 70.1% lower than the 5.6x industry average.

POWR Ratings Reflect Solid Prospects

MDRX has an overall B grade, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MDRX has an A grade for Growth. MDRX’s solid earnings and revenue growth potential are consistent with the Growth grade.

Of the 87 stocks in the D-rated Medical – Services industry, MDRX is ranked #25.

Beyond what I stated above, we have graded MDRX for Value, Quality, Sentiment, Stability, and Momentum. Get all MDRX ratings here.

Bottom Line

MU has exhibited robust financial performance in its last reported quarter and should continue to deliver solid growth in the coming months based on its differentiated services across various segments. In addition, based on the company’s fundamental strength, the stock could exhibit strong price performance in the near term. So, we believe the stock could be an ideal bet now.

How Does Allscripts Healthcare Solutions Inc. (MDRX) Stack Up Against its Peers?

MDRX has an overall POWR Rating of B, which equates to a Buy rating.  Check out these other stocks within the Medical – Services industry with A (Strong Buy) ratings: McKesson Corporation (MCK), NextGen Healthcare Inc. (NXGN), and Ortho Clinical Diagnostics Holdings Plc (OCDX).

Click here to checkout our Healthcare Sector Report for 2022

MDRX shares were unchanged in premarket trading Monday. Year-to-date, MDRX has gained 11.38%, versus a -7.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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