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Allscripts Healthcare Solutions Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2012 06:35PM
Allscripts Healthcare Solutions Inc (MDRX) filed Quarterly Report for the period ended 2012-03-31.
Highlight of Business Operations:Total revenue increased during the three months ended March 31, 2012 compared to the prior year comparable period as we realized increases in all revenue categories with the exception of system sales. The increase in professional services revenue was driven by an increase in professional services headcount which increased our ability to provide more billable services. We increased headcount primarily in response to the demand associated with increases in consulting and meaningful use upgrade services. Maintenance revenue and transaction processing revenue both increased primarily related to growth in our customer base. Outsourcing revenues are included in transaction processing and other and contributed $7 million of the increase in revenue compared to the three months ended March 31, 2011 as we expanded our services to existing customers while also expanding our customer base. SaaS and hosting revenues also contributed to this increase as we expanded our customer base. Partially offsetting these increases in revenue for the three months ended March 31, 2012 is a decrease in system sales which consists of a $7 million decrease in software revenue and a $7 million decrease in hardware revenue as we experienced delays in closing orders with new clients and lower sales to our existing client base. Additionally, we continue to experience a shift in sales to smaller physician practices which typically require less robust hardware solutions.
Gross profit decreased slightly during the three months ended March 31, 2012 as the increase in total revenue was offset by an increase in expenses compared to the prior year comparable period. In the current period, we recognized a $4 million increase in the amortization of software development costs and an increase in professional services cost of revenue primarily due to the increased use of third party resources to assist us in meeting demand attributable to increases in consulting and meaningful use upgrade services which offset an increase in professional services revenue. Also, an increase in transaction processing and other revenue was offset by higher costs as we added headcount and made infrastructure improvements in response to increased demand for our SaaS and hosting solutions. The increases in amortization expense and other costs were partially offset by an increase in software maintenance revenue. Gross profit as a percent of revenue declined compared to the prior year due primarily to a higher revenue mix of third-party systems sales which carry lower gross margin and the increases in amortization of software development costs, professional services costs and transaction processing related costs.
Software delivery revenue decreased during the three months ended March 31, 2012 due to a decrease in system sales which consists of a $7 million decrease in software revenue attributable to a decline in customer orders and a $7 million decrease in hardware revenue as our system sales shift to smaller physician practices which typically require less robust hardware solutions.
Contract backlog represents the value of bookings and maintenance contracts that have not yet been recognized as revenue. As of March 31, 2012, December 31, 2011 and March 31, 2011, we had a committed contract backlog of $2.9 billion, $2.9 billion and $2.7 billion, respectively. A summary of contract backlog by revenue category is as follows:
Total contract backlog increased during the three months ended March 31, 2012 compared to the prior year comparable period primarily due to an increase in professional services backlog which was driven by an increase in orders and an increase in maintenance revenue backlog as a result of new client go-lives as well as maintenance renewals in our installed base.