Allscripts Remains At Neutral

We recently reiterated our Neutral rating on Allscripts-Misys Healthcare Solutions, Inc. (MDRX: 17.91 0.00 0.00%) with a target price of $18.50 based on a P/E multiple of roughly 32.5x our fiscal 2010 EPS estimate of 57 cents. 

Allscripts reported second quarter fiscal 2010 earnings per share of 14 cents, compared to the Zacks Consensus Estimate of 13 cents and the year-ago earnings of 14 cents. 

Total revenues in the second quarter increased 31.6% year over year to $169.3 million. Non-GAAP revenues in the reported quarter increased 4.5% year over year to $170.7 million. Non-GAAP revenues in the second quarter of fiscal 2010 included a deferred revenue adjustment. 

Non-GAAP revenues in the second quarter of fiscal 2009 included the standalone Allscripts’ revenue pre-merger, a deferred revenue adjustment and elimination of prepackaged medications revenue that the company disposed off in Mar 2009. 

Growth was registered across all business segments. Maintenance sales increased 31.3% year over year to $61.3 million. Transaction processing and other revenues increased 25.8% year over year to $56.1 million. System sales increased 61.5% year over year to $33.6 million. Professional services revenues increased 55.1% year over year to $18.3 million. 

Libertyville, IL-based Allscripts Healthcare Solutions Inc. is a leading provider of clinical software and information solutions meant for physicians. In Oct 2008, the company merged with Misys Plc, a global applications software and services company, to form Allscripts−Misys Healthcare Solutions. 

Allscripts faces strong competition from Cerner Corp. (CERN: 82.33 0.00 0.00%), Merge Healthcare Inc. (MRGE: 2.25 0.00 0.00%), Quality Systems Inc. (QSII: 57.24 0.00 0.00%) and MedAssets Inc. (MDAS: 21.50 0.00 0.00%).