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 ~~August~~May 2, ~~2021,~~2022, there were ~~125,010,868~~116,019,972 shares of the registrant's $0.01 par value common stock outstanding.

The accompanying notes are an integral part of these consolidated financial statements.

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 ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ 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 ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2021.~~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, ~~2020~~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.

~~Change in Presentation~~

Certain reclassifications were made to prior period amounts in order to conform to the current period presentation. These reclassifications had no impact on the reported consolidated prior period financial results.

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 ~~December 2019,~~August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. ~~2019-12, “Income Taxes (Topic 740)~~” (“ASU 2019-12”), which is part of the FASB’s overall simplification initiative to reduce the costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 simplifies accounting guidance for intraperiod allocations, deferred tax liabilities, year-to-date losses in interim periods, franchise taxes, step-up in tax basis of goodwill, separate entity financial statements and interim recognition of tax laws or rate changes. ASU 2019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2020. We adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a significant impact on our consolidated financial statements.

~~Accounting Pronouncements Not Yet Adopted~~

~~In August 2020, the 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 ~~simplifies~~requires the application of the if-converted method for calculating diluted earnings per share, ~~calculation in certain areas.~~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 January 1, 2022 using the modified retrospective method of transition, which resulted in an increase in long-term debt of $26.4 million, a decrease in additional paid-in capital of $38.9 million and an increase to retained earnings of $12.5 million, as of January 1, 2022. Refer to Note 10, “Debt” for additional information.

Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): AccountingforContractAssets 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 ~~impact~~effects of ~~this accounting guidance.~~the adoption of ASU 2021-08 on our consolidated financial statements.

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 2 primary revenue streams are (i) software delivery, support and maintenance and (ii) client services. Software delivery, support and maintenance revenue consists of all of our proprietary software sales (either under a perpetual or term license delivery model), subscription-based software sales, transaction-related revenue, the resale of hardware and third-party software and revenue from post-contract client support and maintenance services, which include telephone support services, maintaining and upgrading software and ongoing enhanced maintenance. Client services revenue consists of revenue from managed services solutions, such as private cloud hosting, outsourcing and revenue cycle management, as well as other client services and project-based revenue from implementation, training and consulting services. For some clients, we host the software applications licensed from us using our own or third-party servers. For other clients, we offer an outsourced service in which we assume partial to total responsibility for a healthcare organization’s IT operations using our employees.

At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had capitalized costs to obtain or fulfill a contract of ~~$15.5~~$8.3 million and ~~$16.8~~$8.1 million, respectively, in Prepaid and other current assets and ~~$27.2~~$10.9 million and ~~$27.9~~$11.9 million, respectively, in Other assets. During the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we recognized ~~$4.9~~$2.9 million and ~~$5.8 million, respectively, of amortization expense related to such capitalized costs. During the six months ended June 30, 2021 and 2020, we recognized $10.7 million and $12.5~~$3.3 million, respectively, of amortization expense related to such capitalized costs. The amortization of these capitalized costs to obtain a contract are included in Selling, general and administrative expense within our consolidated statements of operations.

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 ~~table~~tables below:


(In thousands)	Three Months Ended March 31, 2021		Three Months Ended June 30, 2021		Three Months Ended March 31, 2022
Revenue related to deferred revenue balance at beginning of period	$	137,848	$	151,857	$	36,151
Revenue related to new performance obligations satisfied during the period		173,316		158,910		45,306
Revenue recognized under "right-to-invoice" expedient		56,811		62,422		61,114
Reimbursed travel expenses, shipping and other revenue		377		525		101
Total revenue	$	368,352	$	373,714	$	142,672


(In thousands)	Three Months Ended March 31, 2021
Revenue related to deferred revenue balance at beginning of period	$	29,401
Revenue related to new performance obligations satisfied during the period		47,263
Revenue recognized under "right-to-invoice" expedient		56,811
Reimbursed travel expenses, shipping and other revenue		177
Total revenue	$	133,652

(In thousands)

Three Months
Ended
March 31, 2020

Three Months
Ended
June 30, 2020

Revenue related to deferred revenue balance at beginning of period

$
105,366

$
119,545

Revenue related to new performance obligations satisfied during the period

216,580

195,308

Revenue recognized under "right-to-invoice" expedient

58,059

54,082

Reimbursed travel expenses, shipping and other revenue

1,359

369

Total revenue

$
381,364

$
369,304

The aggregate amount of contract transaction price related to remaining unsatisfied performance obligations ~~(commonly referred to as “backlog”)~~ 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 ~~backlog~~unsatisfied performance obligations equaled ~~$3.9~~$1.0 billion as of ~~June 30, 2021,~~March 31, 2022, of which we expect to recognize approximately ~~33%~~38% over the next 12 months, and the remaining ~~67%~~62% thereafter.

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 ~~timing~~ and uncertainty of our revenue and cash flows are affected by economic factors. The tables below ~~tables~~ summarize revenue by type and nature of revenue stream as well as by our reportable ~~segments:~~segments. Refer to Note 16, “Business Segments”, for further information regarding the change to our reportable segments during the first quarter of 2022.


	Three Months Ended March 31, 2022
(In thousands)	Veradigm		Unallocated Amounts		Total
Provider	$	112,271	$	6,394	$	118,665
Payer & Life Sciences		24,007		0		24,007
Total revenue	$	136,278	$	6,394	$	142,672


	Three Months Ended March 31, 2021
(In thousands)	Veradigm		Unallocated Amounts		Total
Provider	$	103,888	$	7,282	$	111,170
Payer & Life Sciences		22,482		0		22,482
Total revenue	$	126,370	$	7,282	$	133,652

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2021

2020

2021

2020

Revenue:

  Recurring revenue

$
303,644

$
303,196

$
599,292

$
613,177

  Non-recurring revenue

70,070

66,108

142,774

137,491

      Total revenue

$
373,714

$
369,304

$
742,066

$
750,668

Three Months Ended June 30, 2021

(In thousands)

Core Clinical and Financial Solutions

Data, Analytics and Care Coordination

Unallocated Amounts

Total

Software delivery, support and maintenance

$
158,754

$
65,150

$
(4,294
)

$
219,610

Client services

151,394

2,710

0

154,104

Total revenue

$
310,148

$
67,860

$
(4,294
)

$
373,714

Three Months Ended June 30, 2020

(In thousands)

Core Clinical and Financial Solutions

Data, Analytics and Care Coordination

Unallocated Amounts

Total

Software delivery, support and maintenance

$
167,220

$
58,664

$
(2,293
)

$
223,591

Client services

143,879

1,834

0

145,713

Total revenue

$
311,099

$
60,498

$
(2,293
)

$
369,304

Six Months Ended June 30, 2021

(In thousands)

Core Clinical and Financial Solutions

Data, Analytics and Care Coordination

Unallocated Amounts

Total

Software delivery, support and maintenance

$
323,964

$
127,009

$
(8,672
)

$
442,301

Client services

295,349

4,416

0

299,765

Total revenue

$
619,313

$
131,425

$
(8,672
)

$
742,066

Six Months Ended June 30, 2020

(In thousands)

Core Clinical and Financial Solutions

Data, Analytics and Care Coordination

Unallocated Amounts

Total

Software delivery, support and maintenance

$
341,301

$
119,122

$
(4,692
)

$
455,731

Client services

290,130

4,807

0

294,937

Total revenue

$
631,431

$
123,929

$
(4,692
)

$
750,668

Contract Assets – Estimate of Credit Losses

We adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU ~~2016-13~~2016-13”) on January 1, 2020 using the cumulative-effect adjustment transition method. The guidance required the recognition of lifetime estimated credit losses expected to occur for contract assets and trade receivables. The guidance also required that we pool assets with similar risk characteristics and consider current economic conditions when estimating losses. The adoption of ASU 2016-13 for contract assets was recorded as a debit to retained earnings of $5.3 million as of January 1, 2020. Refer to Note 3, “Accounts Receivable”, for the adoption impact related to trade receivables.

~~At adoption, we~~We segmented the contract asset population into pools based on their risk assessment. Risks related to contract assets are a customer’s inability to pay or bankruptcy. Each pool was defined by antheir internal credit assessment and business size. ~~The pools were aligned with management’s review of financial performance at the time. In the fourth quarter of 2020, we~~We also used each customer’s primary business unit in our pooling ~~determination.~~determination. This assessment provides ~~additional~~ information of the customer including size, segment and industry. ~~Using this perspective, we added one new pool. We reallocated pools and loss rates accordingly and noted slight shifts in each pool.~~ The ~~new~~ pools are aligned with management’s current review of financial performance. For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, no adjustment to the pools was necessary.

We utilized a loss-rate method to measure expected credit loss for each pool. The loss rate is calculated using a ~~twenty-four-month~~24-month lookback period of credit memos and adjustments divided by the average contract asset balance for each pool during that period. We considered current economic conditions, including how the COVID-19 pandemic is impacting the global economy, internal forecasts, cash collection and credit memos written during the current period when assessing loss rates. We reviewed these factors and concluded that no adjustments should be made to the historical loss rate data. The ~~June 30, 2021~~ analysis for the three months ended March 31, 2022 resulted in no change into the ~~ending~~ estimate of credit losses.

Changes in the estimate of credit losses for contract assets are presented in the table below.


			Three Months Ended March 31,
(In thousands)	Total		2022		2021
Balance at December 31, 2020	$	5,341
Beginning balance			$	2,110	$	2,110
Current period provision		0		0		0
Balance at June 30, 2021	$	5,341
Ending balance			$	2,110	$	2,110
Less: Contract assets, short-term		1,068		576		576
Total contract assets, long-term	$	4,273	$	1,534	$	1,534

3. Accounts Receivable

Trade Accounts Receivable – Estimate of Credit Losses

We adopted ASU 2016-13 on January 1, 2020 using the cumulative-effect adjustment transition method. The guidance required the recognition of lifetime estimated credit losses expected to occur for trade accounts receivable, which resulted in the recording of a debit to retained earnings of $12.6 million as of January 1, 2020. Refer to Note 2, “Revenue from Contracts with Customers” for ~~additional~~ information regarding the adoption of ASU ~~2016-13~~2016-13. No adjustments were made to the pools or historical loss rate data for trade accounts receivable during the three months ended March 31, 2022..

Changes in the estimate of credit losses for trade accounts receivable are presented in the ~~tables~~table below.


				Three Months Ended March 31,
(In thousands)	Total			2022			2021
Balance at December 31, 2020	$	31,596
Beginning balance				$	13,360		$	14,769
Current period provision		1,655			754			340
Write-offs		(1,721	)		(341	)		(894	)
Recoveries		461
Balance at June 30, 2021	$	31,991
Ending balance				$	13,773		$	14,215

~~(1)~~

~~Operating lease costs are recognized on a straight-line basis and are included in Selling, general and administrative expenses within the consolidated statements of operations.~~

(In thousands)

Six Months Ended June 30,

2021

2020

Operating cash flows from operating leases

$
10,083

$
13,953

Right-of-use assets obtained in exchange for operating lease obligations

$
0

$
21,963

(In thousands, except lease term and discount rate)

June 30, 2021

December 31, 2020

Right-of-use assets - operating leases

$
75,052

$
96,601

Current operating lease liabilities

$
19,662

$
22,264

Long-term operating lease liabilities

$
71,597

$
93,463

Weighted average remaining lease term (in years)

5

6

Weighted average discount rate

3.3
%

3.6
%

The future maturities of our leasing arrangements including lease and non-lease components are shown in the below table. The maturities are calculated using foreign currency exchange rates in effect as of ~~June 30, 2021.~~March 31, 2022.

June 30, 2021

(In thousands)

Operating Leases

Remainder of 2021

$
11,590

2022

21,348

2023

19,547

2024

14,114

2025

12,764

Thereafter

20,104

Total lease liabilities

99,467

Less: Amount representing interest

(8,208
)
Less: Short-term lease liabilities

(19,662
)
Total long-term lease liabilities

$
71,597

On ~~July 2, 2019,~~March 25, 2022, we acquired Babel Health which engages in the ~~Pinnacle~~business of designing, developing, selling and ~~Diabetes Collaborative Registries from the American College of Cardiology (“ACC”) as part of our broader strategic partnership with the ACC.~~operating encounter data submission and reconciliation solutions. The ~~total~~base purchase price was ~~$19.7~~$24.0 million, ~~consisting~~subject to adjustment for cash and net working capital balances, resulting in $24.5 million in cash paid ($24.1 million in net cash after accounting for the existing cash balance). The preliminary purchase price allocation has resulted in $12.4 million in intangibles, allocated between trade name, customer relationship and technology assets, and $13.6 million in goodwill, offset by a $1.3 million deferred tax liability, and the remaining net working capital deficit. The allocation of ~~an initial payment~~the purchase price is preliminary and subject to change. The primary areas of ~~$11.7 million plus up~~the purchase price that are not yet finalized are related to ~~an aggregate~~working capital, intangible assets and the residual goodwill. Accordingly, adjustments may be made to the values of ~~$8.0 million pending~~assets and liabilities assumed as the ~~attainment of certain milestones over~~valuation is finalized and additional information is obtained about the ~~next 18 months. The contingent consideration of up to $8.0 million was valued at $5.0 million~~facts and circumstance that existed at the ~~time of closing. As part of this partnership, we operate Pinnacle and Diabetes Collaborative Registries, which extends our EHR-enabled ambulatory network to create~~acquisition date. The management platform will provide managed health care plans with a ~~large-scale chronic disease network. During~~tailored solution for the first quarter of 2021, we extended the ACC earnout agreement to June 30, 2021. In the second quarter of 2021, we paid $0.9 million related to the earnout agreement. The remaining payment was accrued as contingent consideration within our consolidated financial statements. Refer to Note 6, “Fair Value Measurements and Long-term Investments” for additional information regarding the contingent consideration.risk adjustment claims submission process. The business is included in our ~~Data, Analytics~~Veradigm business segment.

On March 2, 2022, we entered into a purchase agreement (the “Harris Purchase Agreement”) with Harris Dawn Holdings Inc. (“Harris”), a wholly-owned subsidiary of Constellation Software Inc., an Ontario corporation, to sell substantially all of the assets of our Hospitals and ~~Care Coordination~~Large Physician Practices business, ~~segment.~~including the Sunrise and TouchWorks solutions (the “Hospitals and Large Physician Practices Business”) for $670.0 million in cash at closing and the opportunity to earn up to an additional $30.0 million based on the Hospitals and Large Physician Practices Business’s revenue through calendar year 2023. Certain assets relating to the Hospitals and Large Physician Practices Business will be excluded from the transaction and retained by the Company, as described in the Harris Purchase Agreement. In addition, Harris will assume certain liabilities related to the Hospitals and Large Physician Practices Business under the terms of the Harris Purchase Agreement. The transactions contemplated by the Harris Purchase Agreement are subject to customary closing conditions, including the applicable waiting period (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”). The HSR waiting period expired as of April 15, 2022. Each party’s obligation to consummate the divestiture is also subject to certain additional conditions, including performance in all material respects by the other party of its obligations under the Harris Purchase Agreement. The Harris Purchase Agreement contains certain termination rights for both Harris and the Company, including if the closing has not occurred by September 2, 2022, or upon the Company intending to enter into a competing transaction (as described in the Harris Purchase Agreement) upon payment of a termination fee. As of March 31, 2022, the assets and liabilities related to the Harris Purchase Agreement were classified as held for sale on our consolidated balance sheet. The held for sale assets and liabilities are classified as current since, as of March 31, 2022, we expected to complete the sale within the next 12 months. The Hospitals and Large Physician Practices Business classified as held for sale was also classified in discontinued operations as the disposition represents a strategic shift that will have a major effect on our operations and financial results. Refer to Note 15, “Discontinued Operations” for additional information regarding the Hospitals and Large Physician Practices Business and the held for sale assets and liabilities presented on our consolidated balance sheet. On May 2, 2022, we completed the sale of the Hospitals and Large Physician Practices Business, which is further discussed in Note 18, “Subsequent Events”.

~~Divestitures~~On August 23, 2021, we completed the sale of substantially all of the assets of our 2bPrecise business to a third party for a non-controlling interest in the combined entity. We realized a pre-tax gain upon the sale of $8.4 million, which was included in the Gain on sale of businesses, net line in our consolidated statements of operations for the year ended December 31, 2021. The historical 2bPrecise business is presented in our “Unallocated Amounts” category.

On December 31, 2020, we completed the sale of substantially all of the assets of our CarePort business to a subsidiary of WellSky Corp., a Delaware corporation (“WellSky”), pursuant to a purchase agreement (the “CarePort Purchase Agreement”). The total consideration for CarePort was ~~$1.35~~$1.35 billion, which was subject to certain adjustments for liabilities assumed by WellSky and net working capital as described in the CarePort Purchase Agreement. We realized a pre-tax gain upon the sale of ~~$933.9~~$933.9 million, which was included in the Gain on sale of discontinued operations line in our consolidated statements of operations for the year ended December 31, 2020. For the ~~six months~~year ended ~~June 30,~~December 31, 2021, we recorded a ~~$0.6~~$0.6 million gain that primarily related to net working capital adjustments in the Gain on sale of discontinued operations line in our consolidated statements of operations. The divestiture was treated as a discontinued operation as of December 31, 2020. Refer to Note 15, “Discontinued Operations” for additional information. On December 31, 2020, we repaid ~~$161.0~~$161.0 million of the Term Loan (as defined below) as a result of the sale, which was a mandatory prepayment in accordance with the Second Amended Credit Agreement (as defined below).

On October 15, 2020, we completed the sale of substantially all of the assets of our EPSiTM business (“EPSi”) to Strata Decision Technology LLC, an Illinois limited liability company (“Strata”), and Roper Technologies, Inc., a Delaware corporation, pursuant to a purchase agreement (the “EPSi PurchaseAgreement”). The total consideration for EPSi was ~~$365.0~~$365.0 million, which was subject to certain adjustments for liabilities assumed by Strata and net working capital as described in the EPSi Purchase Agreement. We realized a pre-tax gain upon the sale of ~~$222.6~~$222.6 million, which was included in the Gain on sale of discontinued operations line in our consolidated statements of operations for the year ended December 31, 2020. The divestiture was treated as a discontinued operation as of December 31, 2020. Refer to Note 15, “Discontinued Operations” for additional information. On October 29, 2020, we repaid ~~$19.0~~$19.0 million of the Term Loan (as defined below) as a result of the sale, which was a mandatory prepayment in accordance with the Second Amended Credit Agreement (as defined below).

6. Fair Value Measurements and Long-term Investments

Fair value measurements are based upon observable and unobservable inputs.

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2: Quoted prices for similar instruments in active markets with inputs that are observable, either directly or indirectly. Our Level 2 derivative financial instruments include foreign currency forward contracts valued based upon observable values of spot and forward foreign currency exchange rates.

Level 3: Unobservable inputs are significant to the fair value of the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Our Level 3 instrument ~~includes~~reflects the fair value of contingent consideration related to a completed acquisition. The fair value is based on a discounted cash flow analysis reflecting the likelihood of achieving specified performance measures or events and captures the contractual nature of the contingencies, commercial risk or time value of money.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of the respective balance sheet dates:


	Balance Sheet	March 31, 2022								December 31, 2021
(In thousands)	Classifications	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Foreign exchange derivative assets	Prepaid expenses and other current assets	$	0	$	100	$	0	$	100	$	0	$	352	$	0	$	352
Total assets		$	0	$	100	$	0	$	100	$	0	$	352	$	0	$	352

Contingent consideration - current	Accrued expenses	$	0	$	0	$	0	$	0	$	0	$	0	$	19	$	19
Total liabilities		$	0	$	0	$	0	$	0	$	0	$	0	$	19	$	19

Balance Sheet

June 30, 2021

December 31, 2020

(In thousands)

Classifications

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Foreign exchange
   derivative assets

Prepaid expenses
   and other
   current assets

$
0

$
0

$
0

$
0

$
0

$
1,509

$
0

$
1,509

Total assets

$
0

$
0

$
0

$
0

$
0

$
1,509

$
0

$
1,509

Contingent consideration
     - current

Accrued
  expenses

$
0

$
0

$
153

$
153

$
0

$
0

$
1,011

$
1,011

Total liabilities

$
0

$
0

$
153

$
153

$
0

$
0

$
1,011

$
1,011

The changes in our Level 3 liability measured at fair value on a recurring basis at ~~June 30, 2021~~March 31, 2022 is summarized as follows:


(In thousands)	Contingent Consideration			Contingent Consideration
Balance at December 31, 2020	$	1,011
Balance at December 31, 2021				$	19
Payments		(858	)		(19	)
Balance at June 30, 2021	$	153
Balance at March 31, 2022				$	0

~~The following table summarizes the quantitative information about our Level 3 fair value measurements at June 30, 2021:~~

The following table summarizes our long-term equity investments which are included in Other assets in the accompanying consolidated balance sheets:

Number of Investees

Original

Carrying Value at

(In thousands, except for number of investees)

at June 30, 2021

Cost

June 30, 2021

December 31, 2020

Equity method investments ⁽¹⁾

3

$
7,099

$
10,438

$
10,744

Cost less impairment

8

37,568

37,976

25,059

Total long-term equity investments

11

$
44,667

$
48,414

$
35,803

~~(1)~~


	Number of Investees		Original		Carrying Value at
(In thousands, except for number of investees)	at March 31, 2022		Cost		March 31, 2022		December 31, 2021
Equity method investments (1)		4	$	7,099	$	11,862	$	12,260
Cost with adjustments		7		47,114		48,791		49,293
Total long-term equity investments		11	$	54,213	$	60,653	$	61,553

(1) Allscripts share of the earnings ~~of our equity method investees is reported based on a one quarter lag.~~

~~During the three and six months ended June 30, 2021, one~~ of our ~~third-party cost~~equity method ~~investments converted its notes and we received 475 thousand shares as a result of the conversion. We also revalued our existing investment~~investees is reported based on ~~the note conversion share price. The note conversion and the revaluation of the existing investment resulted in~~ a ~~$9.7 million gain, which~~ one quarter lag.

~~is included in the Other income (loss), net line in our consolidated statements of operations for the three and six months ended June 30, 2021~~.

~~During the six months ended June 30, 2020, we recorded a $16.8 million gain from the sale of a third-party equity method investment.~~

As of ~~June 30, 2021,~~March 31, 2022, it is not ~~possible~~practicable to estimate the fair value of our non-marketable cost and equity method investments, primarily because of their illiquidity and restricted marketability. The factors we considered in trying to determine fair value include, but are not limited to, available financial information, the issuer’s ability to meet its current obligations, the issuer’s subsequent or planned raises of capital and observable price changes in orderly transactions.

Each quarter, management performs an assessment of each of our investments on an individual basis to determine if there have been any declines in fair value. Based on our assessment, we determined 0 impairment charges were necessary for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Our long-term financial liabilities include amounts outstanding under our ~~senior secured credit facility~~Senior Secured Credit Facility (as described in Note 10, “Debt”), with carrying values that approximate fair value since the interest rates approximate current market rates. Refer to Note 10, “Debt,” for further information regarding our long-term financial liabilities.

7. Stockholders' Equity

Stock-based Compensation Expense

Stock-based compensation expense recognized during the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is included in our consolidated statements of operations as shown in the below table. Stock-based compensation expense includes both non-cash expense related to grants of stock-based awards as well as cash expense related to the employee discount applied to purchases of our common stock under our employee stock purchase plan. NaN stock-based compensation costs were capitalized during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2021		2020		2021		2020		2022			2021
Cost of revenue:
Software delivery, support and maintenance	$	311	$	343	$	807	$	918
Client services		967		808		2,346		1,899
Provider									$	317		$	276
Payer & Life Sciences										(12	)		57
Total cost of revenue		1,278		1,151		3,153		2,817		305			333
Selling, general and administrative expenses		7,551		5,081		15,594		12,123		5,489			2,553
Research and development		1,554		1,428		3,467		3,823		1,130			1,068
Total stock-based compensation expense	$	10,383	$	7,660	$	22,214	$	18,763	$	6,924		$	3,954

Allscripts Long-Term Incentive Plan

We measure stock-based compensation expense at the grant date based on the fair value of the award. We recognize the expense for service-based share awards over the requisite service period on a straight-line basis, net of estimated forfeitures. We recognize the expense for performance-based and market-based share awards over the vesting period under the accelerated attribution method, net of estimated forfeitures. In addition, we recognize stock-based compensation cost for awards with performance conditions if and when we conclude that it is probable that the performance conditions will be achieved.

The fair value of service-based and performance-based restricted stock units is measured at the underlying closing share price of our common stock on the date of grant. The fair value of market-based restricted stock units is measured using the Monte Carlo pricing model. NaN stock options were granted during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

We granted stock-based awards as follows:


	Three Months Ended June 30, 2021				Six Months Ended June 30, 2021				Three Months Ended March 31, 2022
			Weighted-Average				Weighted-Average				Weighted-Average
			Grant Date				Grant Date				Grant Date
(In thousands, except per share amounts)	Shares		Fair Value		Shares		Fair Value		Shares		Fair Value
Service-based restricted stock units		1,963	$	15.41		2,445	$	15.36		25	$	19.86
Performance-based restricted stock units with a service condition		0	$	0.00		235	$	15.16
Market-based restricted stock units with a service condition		0	$	0.00		235	$	17.19
		1,963	$	15.41		2,915	$	15.49		25	$	19.86

During the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and the year ended December 31, ~~2020, 2.1~~2021, 1.0 million and ~~1.9~~2.2 million shares of common stock, respectively, were issued in connection with the release of restrictions on stock awards.

Net Share-settlements

Upon vesting, restricted stock units are generally net share-settled to cover the required withholding tax, and the remaining amount is converted into an equivalent number of shares of common stock. The majority of restricted stock units and awards that vested during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were net-share settled such that we withheld shares with fair value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. Total payments for the employees' minimum statutory tax obligations to the taxing authorities are reflected as a financing activity within the accompanying consolidated statements of cash flows. The total shares withheld for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~895~~628 thousand and ~~764~~383 thousand, respectively, and were based on the value of the restricted stock units on their vesting date as determined by our closing stock price. These net-share settlements had the effect of share repurchases by us as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

Stock Repurchases

On ~~November 18, 2020,~~January 24, 2022, we announced that our Board of Directors approved a new stock purchase program (the ~~“2020~~“2022 Program”) under which we may repurchase up to ~~$300~~$250 million of our common stock, ~~through December 31, 2021.~~with no termination date. The ~~2020~~2022 Program replaced a previous ~~program.~~program approved by our Board of Directors in 2021 that was fully utilized. During the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, we repurchased ~~5.6~~2.3 million shares of our common stock under the 2020 Program. This is inclusive of the shares we received at final settlement of the accelerated share repurchase program we entered into on November 30, 2020, described below. During the six months ended June 30, 2020, we repurchased 1.5 million shares of our common stock under the previous program2022 Program for a total of ~~$9.7 million. We repurchased~~ $49.7 million (after commissions). There were 0 ~~shares~~ repurchases during the three months ended ~~June 30, 2020.~~March 31, 2021.

On May 26, 2021, we announced that our Board approved a new stock purchase program (the “2021 Program”) under which we may repurchase up to $350 million of our common stock. The 2021 Program replaced the 2020 Program and does not have a termination date. During the three months ended June 30, 2021, we repurchased 11.5 million shares of our common stock under the 2021 Program. This is inclusive of the shares we received at initial settlement of the accelerated share repurchase program entered into on June 14, 2021, described below.16

On November 30, 2020, we entered into separate Master Confirmations (each, a “Master Confirmation”) and Supplemental Confirmations (each, together with the related Master Confirmation, an “ASR Agreement”), with JPMorgan Chase Bank, National Association and Wells Fargo Bank, National Association (each, an “ASR Counterparty”, or collectively, “ASR Counterparties”), to purchase shares of our common stock for a total payment of $200.0 million (the “Prepayment Amount”). Under the terms of the ASR Agreements, on November 30, 2020, we paid the Prepayment Amount to the ASR Counterparties and received on December 2, 2020 an initial delivery of approximately 11.7 million shares of our common stock, which is approximately 80% of the total number of shares that could be repurchased under the ASR Agreements if the final purchase price per share equaled the closing price of our common stock on November 30, 2020. These repurchased shares became treasury shares and were recorded as a $165.7 million reduction to stockholders’ equity. The remaining $34.3 million of the Prepayment Amount was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our common stock. The total number of shares received under the ASR Agreements, after final settlement, was based on the average daily volume weighted average price of our common stock during the repurchase period, less an agreed upon discount. Final settlement of the ASR Agreements occurred in May 2021, resulting in the receipt of 1.6 million additional shares, which yielded a weighted-average share repurchase price of approximately $15.07 for the repurchase period.

On June 14, 2021, we entered into Supplemental Confirmations (each, a “June 2021 Supplemental Confirmation”) to the Master Confirmations dated November 30, 2020 (each, as supplemented by the corresponding June 2021 Supplemental Confirmation, a “June 2021 ASR Agreement”), with each of the ASR Counterparties, to purchase shares of our common stock for a total payment of $200.0 million (the “June 2021 Prepayment Amount”). Under the terms of the June 2021 ASR Agreements, on June 14, 2021, we paid the June 2021 Prepayment Amount to the ASR Counterparties and received on June 16, 2021 an initial delivery of approximately 9.1 million shares of our common stock, which is approximately 80% of the total number of shares that could be repurchased under the June 2021 ASR Agreements if the final purchase price per share equaled the closing price of our common stock on June 14, 2021. These repurchased shares became treasury shares and were recorded as a $161.2 million reduction to stockholders’ equity. The remaining $38.8 million of the June 2021 Prepayment Amount was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our common stock. We excluded the potential share impact of any remaining shares subject to repurchase from the computation of diluted earnings per share as these shares would be anti-dilutive as of June 30, 2021. The approximate dollar value of shares of our common stock that may yet be purchased under the ~~2021~~2022 Program ~~following the June 2021 ASR Agreements~~ was ~~$108.4~~$200.4 million as of ~~June 30, 2021.~~

At final settlement, depending on the final purchase price per share, the ASR Counterparties may be required to deliver additional shares of our common stock to the Company, or, under certain circumstances, we may be required to make a cash payment to each ASR Counterparty or may elect to deliver the equivalent value in shares of our common stock. The final purchase price per share under each June 2021 ASR Agreement will generally be based on the average of daily volume weighted average prices of shares of our common stock during a term set forth in the June 2021 ASR Agreements. The June 2021 ASR Agreements contain provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances generally under which the June 2021 ASR Agreements may be accelerated, extended or terminated early by the ASR Counterparties and various acknowledgments, representations and warranties made by the parties to one another. ~~Final settlement of the June 2021 ASR Agreements is expected to be completed during the fourth quarter of 2021, although the settlement may be accelerated at the ASR Counterparties’ option.~~

March 31, 2022. Any future stock repurchase transactions may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means, subject to market conditions. Any repurchase activity will depend on many factors such as our working capital needs, cash requirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of our common stock, and other factors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

8. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average shares of common stock outstanding. For purposes of calculating diluted earnings (loss) per share, the denominator includes both the weighted-average shares of common stock outstanding and dilutive common stock equivalents. Dilutive common stock equivalents consist of restricted stock unit awards and warrants calculated under the treasury stock method, as well as convertible notes calculated under the if-converted method.

The calculations of earnings (loss) per share are as follows:


	Three Months Ended March 31,
(In thousands, except per share amounts)	2022		2021
Basic earnings per Common Share:
Income from continuing operations, net of tax	$	18,471	$	4,300
Income from discontinued operations, net of tax		4,386		4,757
Net income	$	22,857	$	9,057

Weighted-average common shares outstanding		115,862		140,191

Basic earnings from continuing operations per Common Share	$	0.16	$	0.03
Basic earnings from discontinued operations per Common Share		0.04		0.03
Net earnings per Common Share	$	0.20	$	0.06

Diluted earnings per Common Share:
Income from continuing operations, net of tax	$	18,471	$	4,300
Effect of assumed conversions:
Plus: Interest expense, net of tax, associated with 0.875% Convertible Senior Notes		506		0
Income from continuing operations, net of tax after the effect of assumed conversions	$	18,977	$	4,300

Income from discontinued operations, net of tax	$	4,386	$	4,757

Weighted-average common shares outstanding		115,862		140,191
Plus: Dilutive effect of restricted stock unit awards, convertible notes and warrants		22,823		8,949
Weighted-average common shares outstanding assuming dilution		138,685		149,140

Diluted earnings from continuing operations per Common Share	$	0.14	$	0.03
Diluted earnings from discontinued operations per Common Share		0.03		0.03
Net earnings per Common Share	$	0.17	$	0.06

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except per share amounts)

2021

2020

2021

2020

Basic earnings (loss) per Common Share:

Income (loss) from continuing operations, net of tax

$
21,905

$
(21,579
)

$
30,498

$
(53,964
)
Income from discontinued operations, net of tax

21

13,974

485

26,005

Net income (loss)

$
21,926

$
(7,605
)

$
30,983

$
(27,959
)

Weighted-average common shares outstanding

136,647

162,682

138,409

162,571

Basic earnings (loss) from continuing operations per Common Share

$
0.16

$
(0.13
)

$
0.22

$
(0.33
)
Basic earnings from discontinued operations per Common Share

0.00

0.08

0.00

0.16

Net earnings (loss) per Common Share

$
0.16

$
(0.05
)

$
0.22

$
(0.17
)

Diluted earnings (loss) per Common Share:

Income (loss) from continuing operations, net of tax

$
21,905

$
(21,579
)

$
30,498

$
(53,964
)
Income from discontinued operations, net of tax

21

13,974

485

26,005

Net income (loss)

$
21,926

$
(7,605
)

$
30,983

$
(27,959
)

Weighted-average common shares outstanding

136,647

162,682

138,409

162,571

Plus: Dilutive effect of restricted stock unit awards and warrants

8,624

0

8,839

0

Weighted-average common shares outstanding assuming dilution

145,271

162,682

147,248

162,571

Diluted earnings (loss) from continuing operations per Common Share

$
0.15

$
(0.13
)

$
0.21

$
(0.33
)
Diluted earnings from discontinued operations per Common Share

0.00

0.08

0.00

0.16

Net earnings (loss) per Common Share

$
0.15

$
(0.05
)

$
0.21

$
(0.17
)

Due to the net loss for the three and six months ended June 30, 2020, we used basic weighted-average common shares outstanding in the calculation of diluted loss per share, since the inclusion of any stock equivalents would be anti-dilutive.

The following restricted stock unit awards, convertible notes and warrants are not included in the computation of diluted earnings ~~(loss)~~ per share as the effect of including such restricted stock unit awards, convertible notes and warrants in the computation would be anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
(In thousands)	2021		2020		2021		2020		2022		2021
Shares subject to anti-dilutive restricted stock unit awards and warrants excluded from calculation		1,502		50,988		1,501		49,304
Shares subject to anti-dilutive restricted stock unit awards, convertible notes and warrants excluded from calculation										0		5,360

9. Goodwill and Intangible Assets

Goodwill and intangible assets consist of the following:


	March 31, 2022							December 31, 2021
	Gross							Gross
	Carrying		Accumulated			Intangible		Carrying		Accumulated			Intangible
(In thousands)	Amount		Amortization			Assets, Net		Amount		Amortization			Assets, Net
Intangibles subject to amortization:
Proprietary technology	$	254,385	$	(229,033	)	$	25,352	$	249,483	$	(227,408	)	$	22,075
Customer contracts and relationships		404,934		(324,001	)		80,933		397,445		(321,830	)		75,615
Total	$	659,319	$	(553,034	)	$	106,285	$	646,928	$	(549,238	)	$	97,690

Intangibles not subject to amortization:
Registered trademarks						$	52,000						$	52,000
Goodwill							520,187							506,607
Total						$	572,187						$	558,607

June 30, 2021

December 31, 2020

Gross

Gross

Carrying

Accumulated

Intangible

Carrying

Accumulated

Intangible

(In thousands)

Amount

Amortization

Assets, Net

Amount

Amortization

Assets, Net

Intangibles subject to amortization:

Proprietary technology

$
535,156

$
(479,059
)

$
56,097

$
535,092

$
(465,292
)

$
69,800

Customer contracts and relationships

674,347

(521,186
)

153,161

674,336

(509,534
)

164,802

Total

$
1,209,503

$
(1,000,245
)

$
209,258

$
1,209,428

$
(974,826
)

$
234,602

Intangibles not subject to amortization:

Registered trademarks

$
52,000

$
52,000

Goodwill

974,834

974,729

Total

$
1,026,834

$
1,026,729

Changes in the carrying amounts of goodwill by reportable segment for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were as follows:

(In thousands)

Core Clinical and Financial Solutions

Data, Analytics and Care Coordination

Total

Balance as of December 31, 2020

735,502

239,227

974,729

Foreign exchange translation

105

0

105

Balance as of June 30, 2021

$
735,607

$
239,227

$
974,834


(In thousands)	Veradigm		Unallocated		Total
Balance as of December 31, 2021		467,630		38,977		506,607
Additions		13,580		0		13,580
Balance as of March 31, 2022	$	481,210	$	38,977	$	520,187

There were 0 accumulated impairment losses associated with goodwill as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

10. Debt

Debt outstanding, excluding lease obligations, consists of the following:


	March 31, 2022						December 31, 2021
(In thousands)	Principal Balance		Unamortized Discount and Debt Issuance Costs		Net Carrying Amount		Principal Balance		Unamortized Discount and Debt Issuance Costs			Net Carrying Amount
0.875% Convertible Senior Notes (1)	$	207,911	$	4,331	$	203,580	$	167,853	$	(9,057	)	$	176,910
Senior Secured Credit Facility		175,000		1,521		173,479		175,000		1,848			173,152
Total debt	$	382,911	$	5,852	$	377,059	$	342,853	$	(7,209	)	$	350,062

(1) As of March 31, 2022, the principal balance is recognized in debt. As of December 31, 2021, the principal balance is $207,911 thousand; $167,853 thousand is recognized in debt and $40,058 thousand is recognized in additional paid-in capital.

June 30, 2021

December 31, 2020

(In thousands)

Principal Balance

Unamortized Discount and Debt Issuance Costs

Net Carrying Amount

Principal Balance

Unamortized Discount and Debt Issuance Costs

Net Carrying Amount

0.875% Convertible Senior Notes ⁽¹⁾

$
167,853

$
(6,099
)

$
173,952

$
167,853

$
(3,166
)

$
171,019

Senior Secured Credit Facility

250,000

2,640

247,360

0

3,432

(3,432
)
Total debt

$
417,853

$
(3,459
)

$
421,312

$
167,853

$
266

$
167,587

~~(1)~~

~~Principal balance is $207,911 thousand; $167,853 thousand is recognized in debt and $40,058 thousand is recognized in additional paid-in capital.~~

Interest expense consists of the following:


	Three Months Ended March 31,
(In thousands)	2022		2021
Interest expense	$	1,506	$	1,288
Amortization of discounts and debt issuance costs		630		1,855
Total interest expense	$	2,136	$	3,143

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2021

2020

2021

2020

Interest expense

$
1,079

$
4,599

$
2,367

$
9,548

Amortization of discounts and debt issuance costs

1,870

5,715

3,725

11,431

Total interest expense

$
2,949

$
10,314

$
6,092

$
20,979

Interest expense related to the ~~0.875%~~0.875% Convertible Senior Notes ~~and the 1.25% Cash Convertible Senior Notes (which matured and were repaid in full on July 1, 2020),~~ included in the table above ~~consisted~~consists of the following:

On February 15, 2018, Allscripts and Allscripts Healthcare LLC entered into a Second Amended and Restated Credit Agreement (the “Second Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent. The Second Amended Credit Agreement provides for a ~~$400~~$400 million senior secured term loan (the “Term Loan”) and a ~~$900~~$900 million senior secured revolving facility (the “Revolving Facility”), each with a five-year term. ~~The Term Loan was repayable in quarterly installments, which began on June 30, 2018.~~ We repaid the Term Loan in full on December 31, 2020. A total of up to ~~$50~~$50 million of the Revolving Facility is available for the issuance of letters of credit, up to ~~$10~~$10 million of the Revolving Facility is available for swingline loans, and up to ~~$100~~$100 million of the Revolving Facility could be borrowed under certain foreign currencies.

As of ~~June 30, 2021, $250.0~~March 31, 2022, $175.0 million under the Revolving Facility and ~~$1.0~~$1.0 million in letters of credit were outstanding under the Second Amended Credit Agreement.

As of ~~June 30, 2021,~~March 31, 2022, the interest rate on the borrowings under the Second Amended Credit Agreement was LIBOR plus ~~1.50%~~1.50%, which totaled ~~1.60%~~1.96%. We were in compliance with all covenants under the Second Amended Credit Agreement as of ~~June 30, 2021.~~

~~In connection with the sale of our EPSibusiness on October 15, 2020,~~ which is further discussed in Note 5, “Business Combinations and Divestitures”, the terms of our Second Amended Credit Agreement required us to make a mandatory prepayment of our Term Loan in the amount of $19.0 million on October 29, 2020.March 31, 2022.

In connection with the sale of our CarePort business on December 31, 2020, which is further discussed in Note 5, “Business Combinations and Divestitures”, the terms of our Second Amended Credit Agreement required us to make a mandatory prepayment of our Term Loan in the amount of $161.0 million on December 31, 2020.

On August 7, 2019, we entered into a First Amendment to the Second Amended Credit Agreement in order to remain compliant with the covenants of our Second Amended Credit Agreement. The First Amendment provided the financial flexibility to settle the U.S. Department of Justice’s investigations as discussed in Note 14, “Contingencies”, while maintaining our compliance with the covenants of our Second Amended Credit Agreement. None of the original terms of our Second Amended Credit Agreement relating to scheduled future principal payments, applicable interest rates and margins or borrowing capacity under our Revolving Facility were amended.

On July 20, 2020, we entered into a Second Amendment to the Second Amended Credit Agreement. None of the original terms of our Second Amended Credit Agreement relating to scheduled future principal payments, applicable interest rates and margins or borrowing capacity under our Revolving Facility were amended. In connection with this amendment, we incurred fees and other costs totaling ~~$1.4~~$1.4 million, of which a majority was capitalized.

As of ~~June 30, 2021,~~March 31, 2022, we had ~~$649.0~~$724.0 million available borrowing capacity, net of outstanding letters of credit, under the Revolving Facility. There can be no assurance that we will be able to draw on the full available balance of the Revolving Facility if the financial institutions that have extended such credit commitments become unwilling or unable to fund such borrowings or if we are unable to maintain compliance with applicable covenants.

20On April 29, 2022, Allscripts and Allscripts Healthcare LLC entered into a Third Amended and Restated Credit Agreement (the “Third Amended Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent and other lenders party thereto, amending and restating the Second Amended Credit Agreement, which is further discussed in Note 18, “Subsequent Events”.

The issuance in December 2019 of the combined $218.0 million aggregate principal amount of the ~~0.875%~~0.875% Convertible Senior Notes resulted in $0.7 million in debt issuance costs, which were paid in January 2020. We have separately recorded liability and equity components of the 0.875% Convertible Senior Notes, including any discounts and issuance costs, by allocating the proceeds from the issuance between the liability component and the embedded conversion option, or equity component. This allocation was completed by first estimating an interest rate at the time of issuance for similar notes that do not include an embedded conversion option. The semi-annual interest rate of 1.95% was used to compute the initial fair value of the liability component, which totaled $177.9 million at the time of issuance. The excess of the initial proceeds received from the 0.875% Convertible Senior Notes and the $177.9 million liability component was allocated to the equity component, which totaled $40.1 million at the time of issuance before deducting any paid capped call fees. The equity component of $40.1 million, the $17.2 million in paid capped call fees and an allocation of $1.1 million in combined discounts and issuance costs were recorded in Additional paid-in capital within the consolidated balance sheets in December 2019. These were recorded as a discount ~~that will~~and are to be accreted into interest expense through January 1, 2027 using the interest method.

In June 2020, we paid ~~$7.7~~$7.7 million to repurchase ~~$10.1~~$10.1 million of the aggregate principal amount of the ~~0.875%~~0.875% Convertible Senior Notes, which resulted in a ~~$0.5~~$0.5 million gain. In connection with the repurchase, the capped call transaction was partially terminated, and we received ~~$0.3~~$0.3 million, which resulted in a recognition of ~~$0.8~~$0.8 million in equity to offset the capped call fees and a ~~$0.5~~$0.5 million loss.

On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective transition method. The guidance simplifies the accounting for convertible instruments by removing major separation models required under GAAP. The guidance also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions. As a result of the adoption of ASU 2020-06, the liability and equity components of the 0.875% Convertible Senior Notes are to be presented as a single liability as of January 1, 2022. Therefore, as of January 1, 2022, we decreased Additional paid-in capital by $38.9 million, which represented the $40.1 million equity component, offset by the $1.1 million in combined discounts and issuance costs. We increased Retained earnings by $12.5 million to reverse the accretion of interest expense related to the equity component that was recorded from December 2019 through December 2021. We also increased Long-term debt by $26.4 million, which represents the difference between the reduction to Additional paid-in capital and the increase in Retained earnings. The capped call fees remain in Additional paid-in capital within our consolidated balance sheet.

The 0.875% Convertible Senior Notes became convertible at the option of the holders during the first quarter of 2022. However, as of March 31, 2022, none of the 0.875% Convertible Senior Notes have been converted. The remaining principal amount of the ~~0.875%~~0.875% Convertible Senior Notes at ~~June 30, 2021~~March 31, 2022 totaled ~~$207.9~~$207.9 million. The carrying value of the ~~combined equity component, net of~~ capped call fees ~~issuance costs and accretion,~~ at ~~June 30, 2021 totaled $13.6~~March 31, 2022 was $16.4 million.

Future Debt Payments

The following table summarizes future debt principal payment obligations as of ~~June 30, 2021:~~March 31, 2022:



(In thousands)	Total		Remainder of 2021		2022		2023		2024		2025		Thereafter		Total		Remainder of 2022		2023		2024		2025		2026		Thereafter
0.875% Convertible Senior Notes ⁽¹⁾	$	207,911	$	0	$	0	$	0	$	0	$	0	$	207,911	$	207,911	$	0	$	0	$	0	$	0	$	0	$	207,911
Revolving Facility ⁽²⁾		250,000		0		0		250,000		0		0		0		175,000		0		175,000		0		0		0		0
Total debt	$	457,911	$	0	$	0	$	250,000	$	0	$	0	$	207,911	$	382,911	$	0	$	175,000	$	0	$	0	$	0	$	207,911

(1) Amount represents the face value of the 0.875% Convertible Senior Notes.

(2) Assumes no additional borrowings after March 31, 2022, payment of any required periodic installments of principal when due and that all drawn amounts are repaid upon maturity. On May 2, 2022, this amount was repaid with proceeds from the sale of the Hospitals and Large Physician Practices Business.

We account for income taxes under FASB Accounting Standards Codification 740, “Income Taxes” (“ASC 740”). We calculate the quarterly tax provision consistent with the guidance provided by ASC 740, whereby we forecast the estimated annual effective tax rate and then apply that rate to the year-to-date pre-tax book (loss) income. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective rate, including factors such as the valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, or changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. There is no tax benefit recognized on certain of the net operating losses incurred due to insufficient evidence supporting the Company’s ability to use these losses in the future. The effective tax rates were as follows:

Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate primarily due to permanent differences, income attributable to foreign jurisdictions taxed at different rates, state taxes, tax credits and certain discrete items including a windfall benefit of ~~$4.6~~$5.1 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and a ~~shortfall expense~~windfall benefit of ~~$6.9~~$1.0 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Our effective tax ~~rate~~rates for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, compared with the prior year comparable ~~periods, differs~~period, differ primarily due to the ~~fact that~~release of valuation allowance of $11.2 million in the three months ended March 31, 2022. In addition, the permanent items, credits and the impact of foreign earnings had more impact on the pre-tax income of ~~$24.1 million and $35.4~~$4.1 million in the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, compared to the impact of these items on a pre-tax ~~loss~~income of ~~$19.6 million and $56.5~~$5.4 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021.

In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available evidence, including scheduled reversals of deferred tax liabilities, tax-planning strategies, and results of recent operations. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss). During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we released valuation allowances of ~~$0.1~~$11.2 million related to U.S. ~~and foreign net operating loss carryforwards.~~deferred tax assets.

Our unrecognized income tax benefits were ~~$30.1~~$30.5 million and ~~$28.9~~$30.3 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. If any portion of our unrecognized tax benefits is recognized, it could impact our effective tax rate. The tax reserves are reviewed periodically and adjusted considering changing facts and circumstances, such as progress of tax audits, lapse of applicable statutes of limitations and changes in tax law.

Our Harris Purchase Agreement to sell substantially all of the assets of the Hospitals and Large Physician Practices Business includes the majority of our foreign subsidiaries. The assets and liabilities of these foreign subsidiaries have been classified as held for sale on our consolidated balance sheet. As such, the company no longer considers the undistributed earnings of these foreign subsidiaries to be indefinitely invested. Therefore, in the three months ended March 31, 2022, we have recorded a deferred tax asset of $7.0 million. The tax benefit of recording this deferred tax asset has been included in discontinued operations.

12. Derivative Financial Instruments

The following tables provide information about the fair values of our derivative financial instruments as of the respective balance sheet dates:

June 30, 2021

March 31, 2022

Asset Derivatives

(In thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives qualifying as cash flow hedges:

Foreign exchange contracts

Prepaid expenses and other current assets

100

Total derivatives

100


	December 31, 2021
	Asset Derivatives
(In thousands)	Balance Sheet Location	Fair Value
Derivatives qualifying as cash flow hedges:
Foreign exchange contracts	Prepaid expenses and other current assets	$	352
Total derivatives		$	352

December 31, 2020

Asset Derivatives

(In thousands)

Balance Sheet Location

Fair Value

Derivatives qualifying as cash flow hedges:

Foreign exchange contracts

Prepaid expenses and other current assets

$
1,509

Total derivatives

$
1,509

Foreign Exchange Contracts

We have entered into non-deliverable forward foreign currency exchange contracts with reputable banking counterparties to hedge a portion of our forecasted future Indian Rupee-denominated (“INR”) expenses against foreign currency fluctuations between the United States dollar and the INR. These forward contracts cover a percentage of forecasted monthly INR expenses over time. As of ~~June 30, 2021, we had 0~~March 31, 2022, there were 9 forward contracts ~~outstanding.~~outstanding that when entered into were staggered to mature monthly starting in April 2022 and ending in December 2022. In the future, we may enter into additional forward contracts to increase the amount of hedged monthly INR expenses or initiate ~~hedges.~~hedges for monthly periods beyond December 2022. As of March 31, 2022, the notional amount for each of the outstanding forward contracts ranged from 50.0 to 250.0 million INR, or the equivalent of $0.7 million to $3.3 million, based on the exchange rate between the United States dollar and the INR in effect as of March 31, 2022. These amounts also approximate the forecasted future INR expenses we target to hedge in any one month in the future. As of March 31, 2022, we estimate that $0.1 million of net unrealized derivative gains included in accumulated other comprehensive income (loss) (“AOCI”) will be reclassified into income within the next 12 months.

The following tables show the impact of derivative instruments designated as cash flow hedges on the consolidated statements of operations and the consolidated statements of comprehensive ~~loss:~~income (loss):


	Amount of Gain (Loss) Recognized in OCI						Amount of Gain (Loss) Reclassified from AOCI into Income				Amount of Gain (Loss) Recognized in OCI				Amount of Gain (Loss) Reclassified from AOCI into Income
(In thousands)	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021		Location of Gain (Loss) Reclassified from AOCI into Income	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021		Three Months Ended March 31, 2022			Location of Gain (Loss) Reclassified from AOCI into Income	Three Months Ended March 31, 2022
Foreign exchange contracts	$	(54	)	$	121	Cost of Revenue	$	290	$	611	$	(148	)	Cost of Revenue	$	37
						Selling, general and administrative expenses		167		351				Selling, general and administrative expenses		24
						Research and development	$	317	$	668				Research and development	$	43


	Amount of Gain (Loss) Recognized in OCI			Amount of Gain (Loss) Reclassified from AOCI into Income
(In thousands)	Three Months Ended March 31, 2021		Location of Gain (Loss) Reclassified from AOCI into Income	Three Months Ended March 31, 2021
Foreign exchange contracts	$	175	Cost of Revenue	$	321
			Selling, general and administrative expenses		184
			Research and development	$	351

Amount of Gain (Loss) Recognized
in OCI

Amount of Gain (Loss) Reclassified from AOCI into Income

(In thousands)

Three Months
Ended
June 30, 2020

Six Months
Ended
June 30, 2020

Location of Gain (Loss) Reclassified
from AOCI into Income

Three Months
Ended
June 30, 2020

Six Months
Ended
June 30, 2020

Foreign exchange contracts

$
991

$
518

Cost of Revenue

$
(36
)

$
(36
)

Selling, general and
administrative expenses

(18
)

(18
)

Research and development

$
(38
)

$
(38
)

13. Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Changes in the balances of each component included in AOCI are presented in the tables below. All amounts are net of tax.

(In thousands)

Foreign Currency Translation Adjustments

Unrealized Net Gains (Losses) on Foreign Exchange Contracts

Total

Balance as of December 31, 2020⁽¹⁾

$
(2,957
)

$
1,119

$
(1,838
)
Other comprehensive income (loss) before
reclassifications

520

90

610

Net (gains) losses reclassified from accumulated
other comprehensive loss

0

(1,209
)

(1,209
)
Net other comprehensive income (loss)

520

(1,119
)

(599
)
Balance as of June 30, 2021

$
(2,437
)

$
0

$
(2,437
)


(In thousands)	Foreign Currency Translation Adjustments			Unrealized Net Gains (Losses) on Foreign Exchange Contracts			Total
Balance as of December 31, 2021 (1)	$	(3,026	)	$	261		$	(2,765	)
Other comprehensive (loss) income before reclassifications		(150	)		(110	)		(260	)
Net losses (gains) reclassified from accumulated other comprehensive loss		0			(77	)		(77	)
Net other comprehensive income (loss)		(150	)		(187	)		(337	)
Balance as of March 31, 2022 (2)	$	(3,176	)	$	74		$	(3,102	)

(1) Net of taxes of $91 thousand for unrealized net gains on foreign exchange contract derivatives.

(2) Net of taxes of $25 thousand for unrealized net gains on foreign exchange contract derivatives.


(In thousands)	Foreign Currency Translation Adjustments			Unrealized Net Gains (Losses) on Foreign Exchange Contracts			Total
Balance as of December 31, 2020 (1)	$	(2,957	)	$	1,119		$	(1,838	)
Other comprehensive income (loss) before reclassifications		99			130			229
Net (gains) losses reclassified from accumulated other comprehensive loss		0			(635	)		(635	)
Net other comprehensive income (loss)		99			(505	)		(406	)
Balance as of March 31, 2021 (2)	$	(2,858	)	$	614		$	(2,244	)

(1) Net of taxes of $390 thousand for unrealized net gains on foreign exchange contract derivatives.

(2) Net of taxes of $214 thousand for unrealized net gains on foreign exchange contract derivatives.

~~(1)~~

~~Net of taxes of $390 thousand for unrealized net gains on foreign exchange contract derivatives.~~

(In thousands)

Foreign Currency Translation Adjustments

Unrealized Net Gains (Losses) on Foreign Exchange Contracts

Total

Balance as of December 31, 2019⁽¹⁾

$
(4,392
)

$
0

$
(4,392
)
Other comprehensive (loss) income before
reclassifications

(1,594
)

384

(1,210
)
Net losses (gains) reclassified from accumulated
other comprehensive loss

0

69

69

Net other comprehensive income (loss)

(1,594
)

453

(1,141
)
Balance as of June 30, 2020⁽²⁾

$
(5,986
)

$
453

$
(5,533
)

~~(1)~~

~~Net of taxes of $149 thousand arising from the revaluation of tax effects included in AOCI.~~

~~(2)~~

~~Net of taxes of $158 thousand for unrealized net gains on foreign exchange contract derivatives.~~

Income Tax Effects Related to Components of Other Comprehensive Income (Loss)

The following tables reflect the tax effects allocated to each component of other comprehensive income (loss) (“OCI”):


	Three Months Ended March 31,
	2022								2021
(In thousands)	Before-Tax Amount			Tax Effect		Net Amount			Before-Tax Amount			Tax Effect			Net Amount
Foreign currency translation adjustments	$	(150	)	$	0	$	(150	)	$	99		$	0		$	99
Derivatives qualifying as cash flow hedges:
Foreign exchange contracts:
Net gains (losses) arising during the period		(148	)		38		(110	)		175			(45	)		130
Net (gains) losses reclassified into income		(103	)		26		(77	)		(856	)		221			(635	)
Net change in unrealized gains (losses) on foreign exchange contracts		(251	)		64		(187	)		(681	)		176			(505	)
Other comprehensive (loss) income	$	(401	)	$	64	$	(337	)	$	(582	)	$	176		$	(406	)

Three Months Ended June 30,

2021

2020

(In thousands)

Before-Tax Amount

Tax Effect

Net Amount

Before-Tax Amount

Tax Effect

Net Amount

Foreign currency translation adjustments

$
421

$
0

$
421

$
918

$
0

$
918

Derivatives qualifying as cash flow hedges:

Foreign exchange contracts:

Net (losses) gains arising during the period

(54
)

14

(40
)

991

(256
)

735

Net (gains) losses reclassified into income

(774
)

200

(574
)

93

(24
)

69

Net change in unrealized (losses) gains on foreign exchange contracts

(828
)

214

(614
)

1,084

(280
)

804

Other comprehensive (loss) income

$
(407
)

$
214

$
(193
)

$
2,002

$
(280
)

$
1,722

Six Months Ended June 30,

2021

2020

(In thousands)

Before-Tax Amount

Tax Effect

Net Amount

Before-Tax Amount

Tax Effect

Net Amount

Foreign currency translation adjustments

$
520

$
0

$
520

$
(1,594
)

$
0

$
(1,594
)
Derivatives qualifying as cash flow hedges:

Foreign exchange contracts:

Net gains (losses) arising during the period

121

(31
)

90

518

(134
)

384

Net (gains) losses reclassified into income

(1,630
)

421

(1,209
)

93

(24
)

69

Net change in unrealized (losses) gains on foreign exchange contracts

(1,509
)

390

(1,119
)

611

(158
)

453

Other comprehensive (loss) income

$
(989
)

$
390

$
(599
)

$
(983
)

$
(158
)

$
(1,141
)

14. Contingencies

In addition to commitments and obligations in the ordinary course of business, we are currently subject to various legal proceedings and claims that have not been fully adjudicated. We intend to vigorously defend ourselves, as appropriate, in these matters.

No less than quarterly, we review the status of each significant matter and assess our potential financial exposure. We accrue a liability for an estimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made.

The outcome of legal proceedings is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. In the opinion of our management, the ultimate disposition of pending legal proceedings or claims will not have a material adverse effect on our consolidated financial position, liquidity or results of operations. However, if one or more of these legal proceedings were resolved against or settled by us in a reporting period for amounts in excess of our management’s expectations, our consolidated financial statements for that and subsequent reporting periods could be materially adversely affected. Additionally, the resolution of a legal proceeding against us could prevent us from offering our products and services to current or prospective clients or cause us to incur increased compliance costs, either of which could further adversely affect our operating results.

The Enterprise Information Solutions business (the “EIS Business”) acquired from McKesson Corporation (“McKesson”) on October 2, 2017 is subject to a May 2017 civil investigative demand (“CID”) from the U.S. Attorney’s Office for the Eastern District of New ~~York.~~York related to the Horizon Clinicals software. In August 2018, McKesson received an additional CID (together with the May 2017 CID, the “McKesson CIDs”), related to the Paragon software. The ~~CID requests~~McKesson CIDs request documents and information related to the certification McKesson obtained ~~for Horizon Clinicals~~ in connection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program. ~~In August 2018, McKesson received an additional CID seeking similar information for Paragon.~~ McKesson has agreed, with respect to the McKesson CIDs, to indemnify Allscripts for amounts paid or payable to the government (or any private relator) involving any products or services marketed, sold or licensed by the EIS Business as of or prior to the closing of the acquisition. In October 2021, Allscripts received a CID seeking information about its acquisition of the EIS Business from McKesson and the Horizon Clinicals software. McKesson has agreed to assume defense of this CID.

Practice Fusion, acquired by Allscripts on February 13, 2018, received in March 2017 a request for documents and information from the U.S. Attorney’s Office for the District of Vermont pursuant to a CID. Between April 2018 and June 2019, Practice Fusion received from the U.S. Department of Justice (the “DOJ”) seven additional requests for documents and information through four additional CIDs and three Health Insurance Portability and Accountability Act (“HIPAA”) subpoenas. The document and information requests received by Practice Fusion related to both the certification Practice Fusion obtained in connection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program and Practice Fusion’s compliance with the Anti-Kickback Statute (“AKS”) and HIPAA as it relates to certain business practices engaged in by Practice Fusion. In March 2019, Practice Fusion received a grand jury subpoena in connection with a criminal investigation related to Practice Fusion’s compliance with the AKS. On August 6, 2019, Practice Fusion reached an agreement in principle with the DOJ to resolve all of the DOJ’s outstanding civil and criminal investigations, including the investigation by the U.S. Attorney’s Office for the District of Vermont, and we announced that on January 27, 2020, Practice Fusion entered into a deferred prosecution agreement (the “Deferred Prosecution Agreement”) and various civil settlement agreements, including with the Medicaid programs for each U.S. state, the District of Columbia and Puerto Rico (collectively, the “Settlement Agreements”) resolving the investigations conducted by the DOJ and the U.S. Attorney’s Office. The Settlement Agreements required Practice Fusion to, among other ~~matters,~~things, pay a criminal fine of ~~$25.3~~$25.3 million, a forfeiture payment of ~~$959,700~~$959,700 and a civil settlement of ~~$118.6~~$118.6 million, which includes ~~$5.2~~$5.2 million designated for the state Medicaid program expenditures, all of which, as of December 31, 2020, ~~have been~~were paid in full. The Deferred Prosecution Agreement required Practice Fusion to retain an “Oversight Organization” to oversee the Practice Fusion’s implementation of certain compliance measures and ongoing compliance efforts. On August 17, 2021, Practice Fusion’s initial Oversight Organization resigned, and on August 25, 2021, Practice Fusion received a notice from the U.S. Attorney’s Office for the District of Vermont stating Practice Fusion was in breach of the Deferred Prosecution Agreement due to such resignation. On September 17, 2021, Practice Fusion engaged a new Oversight Organization. On March 18, 2022, Practice Fusion reached a settlement with the U.S. Attorney’s Office concerning this claim, pursuant to which Practice Fusion agreed to pay $200,000 to the United States and extend the Deferred Prosecution Agreement by 11 weeks; Practice Fusion did not admit liability for any breach of the Deferred Prosecution Agreement. The settlement of $200,000 was paid by Practice Fusion on April 5, 2022.

15. Discontinued Operations

Hospitals and Large Physician Practices Discontinued Operation

On March 2, 2022, we entered into the Harris Purchase Agreement to sell substantially all of the assets of the Hospitals and Large Physician Practices Business. The Hospitals and Large Physician Practices Business sale represents a strategic shift that will have a major effect on our operations and financial results. Therefore, as of March 31, 2022, we reported the Hospitals and Large Physician Practices Business as discontinued operations. On May 2, 2022, we completed the sale of the Hospitals and Large Physician Practices Business, which is further discussed in Note 18, “Subsequent Events.”

The following table summarizes the major classes of assets and liabilities of the Hospitals and Large Physician Practices Business as reported on the consolidated balance sheets as of March 31, 2022 and December 31, 2021:


(In thousands)	March 31, 2022		December 31, 2021
Carrying amounts of major classes of assets associated with Hospitals and Large Physician Practices included as part of discontinued operations:
Cash and cash equivalents	$	67,671	$	55,834
Restricted cash		847		861
Accounts receivable, net of allowance of $18,045 and $16,584 as of March 31, 2022 and December 31, 2021, respectively		200,407		155,447
Contract assets, net of allowance of $492 as of March 31, 2022 and December 31, 2021		68,786		61,382
Prepaid expenses and other current assets		63,310		58,431
Total current assets		401,021		331,955

Fixed assets, net		33,686		38,083
Software development costs, net		91,810		97,416
Intangible assets, net		77,997		86,240
Goodwill		467,725		467,871
Deferred taxes, net		8,393		6,607
Contract assets - long-term, net of allowance of $739 as of March 31, 2022 and December 31, 2021		31,934		28,623
Right-of-use assets - operating leases		48,089		50,585
Other assets		14,092		17,731
Total assets (1)	$	1,174,747	$	1,125,111

Carrying amounts of major classes of liabilities associated with Hospitals and Large Physician Practices included as part of discontinued operations:

Accounts payable	$	21,708	$	11,555
Accrued expenses		45,852		38,007
Accrued compensation and benefits		37,506		61,167
Deferred revenue		274,541		205,152
Current operating lease liabilities		13,613		13,466
Total current liabilities		393,220		329,347

Deferred revenue long-term		475		2,568
Long-term operating lease liabilities		44,952		48,068
Other liabilities		341		270
Total liabilities (1)	$	438,988	$	380,253

(1) The total assets and total liabilities in the above table for the three months ended March 31, 2022 and for the year ended December 31, 2021, are presented in the balance sheet as of March 31, 2022 as Assets held for sale and Liabilities related to assets held for sale.

The following table summarizes the major income and expense line items of the Hospitals and Large Physician Practices Business as reported in the consolidated statements of operations for the three months ended March 31, 2022 and 2021.


	Three Months Ended March 31,
(In thousands)	2022			2021
Major income and expense line items related to Hospitals and Large Physician Practices:
Revenue:
Provider	$	214,230		$	234,700
Total revenue		214,230			234,700
Cost of revenue:
Provider		143,692			147,572
Total cost of revenue		143,692			147,572
Gross profit		70,538			87,128
Selling, general and administrative expenses		48,749			49,545
Research and development		23,856			28,513
Amortization of intangible assets		3,450			3,460
(Loss) income from discontinued operations for Hospitals and Large Physician Practices		(5,517	)		5,610
Other income, net		496			239
(Loss) income from discontinued operations for Hospitals and Large Physician Practices before income taxes		(5,021	)		5,849
Income tax benefit (provision)		9,407			(1,556	)
Income from discontinued operations, net of tax for Hospitals and Large Physician Practices	$	4,386		$	4,293

EPSi and CarePort Discontinued Operation

During 2020, we implemented a strategic initiative to sell 2 of our businesses, EPSi and CarePort. Since both businesses were part of the same strategic initiative and were sold within the same period, the combined sale of EPSi and CarePort ~~represents~~represented a strategic shift that had a major effect on our operations and financial results. As of December 31, 2020, these businesses were reported together as discontinued operations.

On October 15, 2020, we completed the sale of our EPSi business. Prior to the sale, EPSi was part of the ~~Unallocated~~“Unallocated Amounts” category as it did not meet the requirements to be a reportable segment nor the criteria to be aggregated into our ~~two~~2 reportable segments. On its own, the divestiture of the EPSi business did not represent a strategic shift that had a major effect on our operations and financial results. However, the combined sale of EPSi and CarePort represented a strategic shift that had a major effect on our operations and financial results. Therefore, EPSi was treated as a discontinued operation.

On December 31, 2020, we completed the sale of our CarePort business. Prior to the sale, CarePort was part of the former Data, Analytics and Care Coordination reportable segment. On its own, the divestiture of the CarePort business represented a strategic shift that had a major effect on our operations and financial results.

~~The following table summarizes the major classes of assets and liabilities of EPSi and CarePort, as reported on the consolidated balance sheets as of June 30, 2021 and December 31, 2020:~~25

(In thousands)

June 30, 2021

December 31, 2020

Carrying amounts of major classes of liabilities associated with EPSi and CarePort included as part of discontinued operations:

Accrued expenses

$
2,670

$
6,669

Income tax payable

0

316,142

Total current liabilities attributable to discontinued operations

$
2,670

$
322,811

The following table summarizes the major income and expense line items of EPSi and CarePort as reported in the consolidated statements of operations for the three ~~and six~~ months ended ~~June 30, 2021 and 2020.~~March 31, 2021. The activity during the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 relates to certain adjustments made in connection with the sale of EPSi and CarePort, primarily ~~of which relates~~relating to net working capital adjustments that impacted the gain on the sale of the discontinued operations.

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2021

2020

2021

2020

Major income and expense line items related to EPSi and CarePort:

Revenue:

Software delivery, support and maintenance

$
363

$
32,431

$
0

$
63,913

Client services

5

4,488

0

8,366

Total revenue

368

36,919

0

72,279

Cost of revenue:

Software delivery, support and maintenance

294

3,113

(193
)

6,354

Client services

22

4,313

145

8,878

Amortization of software development and acquisition-related assets

0

2,607

0

5,124

Total cost of revenue

316

10,033

(48
)

20,356

Gross profit

52

26,886

48

51,923

Selling, general and administrative expenses

9

4,722

74

9,186

Research and development

8

2,237

(32
)

5,015

Amortization of intangible assets

0

8

0

15

Income from discontinued operations for EPSi and CarePort

35

19,919

6

37,707

Interest expense

0

(1,081
)

0

(2,639
)
Other income, net

1

0

1

0

Gain on sale of discontinued operations

0

0

647

0

Income from discontinued operations for EPSi and CarePort before income taxes ⁽¹⁾

36

18,838

654

35,068

Income tax provision

(15
)

(4,864
)

(169
)

(9,051
)
Income from discontinued operations, net of tax for EPSi and CarePort ⁽²⁾

$
21

$
13,974

$
485

$
26,017


	Three Months Ended
(In thousands)	March 31, 2021
Major income and expense line items related to EPSi and CarePort:
Revenue:
Provider	$	(368	)
Total revenue		(368	)
Cost of revenue:
Provider		(364	)
Total cost of revenue		(364	)
Gross loss		(4	)
Selling, general and administrative expenses		65
Research and development		(40	)
Loss from discontinued operations for EPSi and CarePort		(29	)
Gain on sale of discontinued operations		647
Income from discontinued operations for EPSi and CarePort before income taxes		618
Income tax provision		(154	)
Income from discontinued operations, net of tax for EPSi and CarePort	$	464

~~(1)~~ Income from discontinued operations for EPSi and CarePort does not agree to the consolidated statements of operations for the six months ended June 30, 2020, due to residual amounts related to Netsmart (as defined below)~~. Refer to Note 17, “Supplemental Disclosures” for additional information.~~

~~(2)~~ Income from discontinued operations, net of tax for EPSi and CarePort does not agree to the consolidated statements of operations for the six months ended June 30, 2020 due to residual amounts related to Netsmart (as defined below). Refer to Note 17, Supplemental Disclosures” for additional information.

16. Business Segments

We primarily derive our revenues from sales of our proprietary software (either as a direct license sale or under a subscription delivery model), which also serves as the basis for our recurring service contracts for software support and maintenance and certain transaction-related services. In addition, we provide various other client services, including installation, and managed services, such as outsourcing, private cloud hosting and revenue cycle management.

As of ~~June 30, 2021,~~January 1, 2022, we had 23 operating ~~segments.~~segments: (i) Hospitals and Large Physician Practices, (ii) Veradigm and (iii) Certain Products (as defined below). The Hospitals and Large Physician Practices and Veradigm operating segments ~~are~~were equivalent to the two reportable ~~segments.~~ segments described below.

The ~~Core Clinical~~Hospitals and ~~Financial Solutions~~Large Physician Practices segment ~~derives~~derived its revenue from the sale of ~~software applications for patient engagement,~~ integrated clinical and financial management solutions, which primarily ~~include~~included EHR-related ~~software, financial and practice management~~ software, related installation, support and maintenance, outsourcing and private cloud ~~hosting and revenue cycle management.~~hosting. The ~~Data, Analytics and Care Coordination~~Veradigm segment ~~derives~~derived its revenue from ~~the sale of practice reimbursement and~~ payer and life sciences solutions, which are mainly targeted at ~~physician practices,~~ payers, life sciences companies and other key healthcare stakeholders. Additionally, revenue was derived from software applications for patient engagement and the sale of EHR software to single-specialty and small and mid-sized physician practices, including related clinical, financial, administrative and operational solutions. These solutions ~~enable~~enabled clients to transition, analyze and coordinate care and improve the quality, efficiency and value of healthcare delivery across the entire care community. The “Unallocated Amounts” category ~~consists~~consisted of the 2bPrecise business, certain products that were shifted from the previous Core Clinical and Financial Solutions reportable segment due to the organizational changes (“Certain Products”), transfer pricing revenues and ~~as of January 1, 2021 also includes~~ certain corporate-related expenses. The amounts included in the “Unallocated Amounts” category for 2bPrecise and Certain Products did not meet the requirements to be reportable segments nor the criteria to be aggregated into the 2 reportable segments.

On March 2, 2022, we entered into the Harris Purchase Agreement to sell substantially all of the assets of our Hospitals and Large Physician Practices Business. As of March 31, 2022, the assets and liabilities related to the Harris Purchase Agreement were classified as held for sale on our consolidated balance sheet. The held for sale assets and liabilities are classified as current since, as of March 31, 2022, we expected to complete the sale within the next 12 months. The Hospitals and Large Physician Practices Business classified as held for sale was classified in discontinued operations as the disposition represents a strategic shift that will have a major effect on our operations and financial results. As a result of the transaction, we have realigned our reporting structure. As of March 31, 2022, we have two operating segments: (i) Veradigm and (ii) Certain Products. The Veradigm operating segment is the equivalent to our one reportable segment. The prior period segment disclosures below have been revised to conform to the current period presentation.

Our chief operating decision maker uses segment revenues, gross profit and income (loss) from operations as measures of performance and to make decisions about the allocation of resources. We do not track our assets by segment.


	Three Months Ended March 31,
(In thousands)	2022			2021
Revenue:
Veradigm	$	136,278		$	126,370
Unallocated Amounts		6,394			7,282
Total revenue	$	142,672		$	133,652

Gross profit:
Veradigm	$	69,195		$	58,623
Unallocated Amounts		4,286			4,294
Total gross profit	$	73,481		$	62,917

Income (loss) from operations:
Veradigm	$	18,115		$	11,494
Unallocated Amounts		(11,543	)		(3,765	)
Total income (loss) from operations	$	6,572		$	7,729

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2021

2020

2021

2020

Revenue:

Core Clinical and Financial Solutions

$
310,148

$
311,099

$
619,313

$
631,431

Data, Analytics and Care Coordination

67,860

60,498

131,425

123,929

Unallocated Amounts

(4,294
)

(2,293
)

(8,672
)

(4,692
)
Total revenue

$
373,714

$
369,304

$
742,066

$
750,668

Gross profit:

Core Clinical and Financial Solutions

$
118,787

$
108,522

$
238,749

$
208,956

Data, Analytics and Care Coordination

32,966

29,076

63,049

60,578

Unallocated Amounts

0

0

0

0

Total gross profit

$
151,753

$
137,598

$
301,798

$
269,534

Income (loss) from operations:

Core Clinical and Financial Solutions

$
11,947

$
(15,834
)

$
29,552

$
(36,546
)
Data, Analytics and Care Coordination

2,875

(8,831
)

3,257

(15,095
)
Unallocated Amounts

(4,447
)

0

(9,094
)

0

Total income (loss) from operations

$
10,375

$
(24,665
)

$
23,715

$
(51,641
)

17. Supplemental Disclosures

Supplemental Consolidated Statements of Cash Flows Information

~~The majority of the restricted cash balance as of June 30, 2021 represents lease deposits.~~ The majority of the restricted cash balance as of ~~June 30, 2020~~March 31, 2022 and 2021 represents lease ~~deposits~~deposits.


	March 31,
(In thousands)	2022		2021
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	82,782	$	453,772
Restricted cash		1,305		1,308
Total cash, cash equivalents and restricted cash	$	84,087	$	455,080

18. Subsequent Events

On April 29, 2022, Allscripts and ~~an escrow account established~~Allscripts Healthcare LLC entered into the Third Amended Credit Agreement, with JPMorgan Chase Bank, N.A., as ~~part~~administrative agent and other lenders party thereto, amending and restating the Second Amended Credit Agreement. The Third Amended Credit Agreement provides for a $700.0 million New Revolving Facility. A total of up to $50.0 million of the ~~acquisition~~New Revolving Facility is available for the issuance of ~~Netsmart~~letters of credit, up to $25.0 million of the New Revolving Facility is available for swingline loans, and up to $100.0 million of the New Revolving Facility could be borrowed under certain foreign currencies. Proceeds from the borrowings under the Third Amended Credit Agreement were used for the refinancing of loans under the Second Amended Credit Agreement.

On May 2, 2022, Allscripts, Allscripts Healthcare LLC, Allscripts Software, LLC, a Delaware limited liability company (“~~Netsmart”~~Allscripts Software”), PF2 EIS LLC, a Delaware limited liability company (“PF2”), Allscripts IHC, LLC, a Delaware limited liability company (“Allscripts IHC”), and Allscripts Healthcare US, LP, a Delaware limited partnership (together with Allscripts Healthcare LLC, Allscripts Software, PF2 and Allscripts IHC, the “Sellers”), completed the previously-announced divestiture of the net assets of the Sellers’ Hospitals and Large Physician Practices Business to Altera Digital Health Inc. (formerly known as Harris Dawn Holdings Inc.), a Delaware corporation (“Buyer”), a wholly-owned subsidiary of Constellation Software Inc., an Ontario corporation, pursuant to the Harris Purchase Agreement, dated March 2, 2022 (the “HLPP Divestiture”).

At the closing of the HLPP Divestiture, Buyer acquired substantially all of the assets of the Business for $670.0 million in ~~2016,~~cash paid at closing and the opportunity to ~~be used~~earn up to an additional $30.0 million based on the Hospitals and Large Physician Practices Business’s revenue through calendar year 2023. Certain assets of the Sellers relating to the Business were excluded from the transaction and retained by ~~Netsmart~~the Sellers. In addition, Buyer assumed certain liabilities related to ~~facilitate~~ the ~~integration~~Business under the terms of ~~Allscripts’ former Homecare~~^TM ~~business.~~the Purchase Agreement.

June 30,

(In thousands)

2021

2020

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

$
229,254

$
199,004

Restricted cash

2,129

6,194

Total cash, cash equivalents and restricted cash

$
231,383

$
205,198

Six Months Ended June 30,

(In thousands)

2021

2020

Supplemental non-cash information:

Issuance of treasury stock to commercial partner

$
534

$
752

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical fact or pattern, including statements regarding the potential impacts of the COVID-19 pandemic and steps we have taken or plan to take in response thereto, statements related to the effect of macroeconomic trends, statements regarding evolving patient care models, statements regarding legislative, administrative and regulatory actions on our business and opportunities related to accumulated patient data, ~~and~~ statements regarding our expected future investment in research and development ~~efforts.~~efforts and statements regarding our operations following the sale of the Hospital and Large Physician Practices Business. Forward-looking statements can also be identified by the use of words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance. Actual results could differ significantly from those set forth in the forward-looking statements, and reported results should not be considered an indication of future performance or events. Certain factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but are not limited to: our ability to achieve the margin targets associated with our margin improvement initiatives within the contemplated time periods, if at all; the magnitude, severity and duration of the COVID-19 pandemic, including the impacts of the pandemic, along with the impacts of our responses and the responses by governments and other businesses to the pandemic, on our business, our employees, our clients and our suppliers; security breaches resulting in unauthorized access to our or our clients’ computer systems or data, including denial-of-services ransomware or other Internet-based attacks; ~~our use of the proceeds from the sale of our EPSi and CarePort businesses;~~ the failure by Practice Fusion to comply with the terms of the settlement agreements with the U.S. Department of Justice (the “DOJ”); the costs and burdens of compliance by Practice Fusion with the terms of its settlement agreements with the DOJ; additional investigations and proceedings from governmental entities or third parties other than the DOJ related to the same or similar conduct underlying the DOJ’s investigations into Practice Fusion’s business practices; our ability to recover from third parties (including insurers) any amounts paid in connection with Practice Fusion’s settlement agreements with the DOJ and related inquiries; the expected financial results of businesses acquired by us; the successful integration of businesses ~~recently~~ acquired by us; the anticipated and unanticipated expenses and liabilities related to businesses acquired by us, including the civil investigation by the U.S. Attorney’s Office involving our Enterprise Information Solutions business; other risks associated with investments and acquisitions; risks associated with the disposition of the Hospitals and Large Physician Practices Business; our failure to compete successfully; consolidation in our industry; current and future laws, regulations and industry initiatives; increased government involvement in our industry; the failure of markets in which we operate to develop as quickly as expected; our or our customers’ failure to see the benefits of government programs; changes in interoperability or other regulatory standards; our ability to maintain and expand our business with existing clients or effectively transition clients to newer products; the effects of the realignment of our sales, services and support organizations; market acceptance of our products and services; the unpredictability of the sales and implementation cycles for our products and services; our ability to manage future growth; our ability to introduce new products and services; our ability to establish and maintain strategic relationships; ~~risks associated with investments and acquisitions;~~ the performance of our products; our ability to protect our intellectual property rights; the outcome of legal proceedings involving us; our ability to hire, retain and motivate key personnel; performance by our content and service providers; liability for use of content; price reductions; our ability to license and integrate third-party technologies; risks related to global operations; variability of our quarterly operating results; risks related to our outstanding indebtedness; changes in tax rates or laws; business disruptions; our ability to maintain proper and effective internal controls; asset and long-term investment impairment charges; and the other factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (our “Form 10-K”) under the heading “Risk Factors” and elsewhere. The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Part I, Item 1, “Financial Statements” in this Form 10-Q, as well as our Form 10-K filed with the Securities and Exchange Commission (the “SEC”). We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Each of the terms “we,” “us,” “our,” “Company,” or “Allscripts” as used herein refers collectively to Allscripts Healthcare Solutions, Inc. and/or its wholly-owned subsidiaries and controlled affiliates, unless otherwise stated.

Overview

Our Business Overview and Regulatory Environment

We deliver information technology (“IT”) solutions and services to help healthcare organizations achieve optimal clinical, financial and operational results. We sell our solutions to physicians, hospitals, governments, health systems, health plans, life sciences companies, retail clinics, retail pharmacies, pharmacy benefit managers, insurance companies, employer wellness clinics and post-acute organizations, such as home health and hospice agencies. We help our clients improve the quality and efficiency of health care with solutions that include electronic health records (“EHRs”), information connectivity, private cloud hosting, outsourcing, analytics, patient access and population health management. We derive our revenues primarily from sales of our proprietary software (either as a perpetual license sale or under a subscription delivery model), support and maintenance services, and managed services, such as outsourcing, private cloud hosting and revenue cycle management.

Our solutions empower healthcare professionals with the data, insights and connectivity to other caregivers they need to succeed in an industry that is rapidly changing from fee-for-service models to fee-for-value advanced payment models. We believe we offer some of the most comprehensive solutions in our industry today. Healthcare organizations can effectively manage patients and patient populations across all care settings using a combination of our physician, hospital, health system, post-acute care and population health management products and services. We believe these solutions will help transform health care as the industry seeks new ways to manage risk, improve quality and reduce costs.

Globally, healthcare providers continue to face ~~the acuity of~~ the COVID-19 crisis, as well as an aging population and the challenge of caring for an increasing number of patients with chronic diseases. At the same time, practitioners worldwide are also under growing pressure to demonstrate the delivery of high-quality care at lower costs and to fully embrace expectations of efficient, patient-centered information exchange. Congressional oversight of EHRs and health information technology has increased in recent years. This increased oversight has impacted and could continue to impact our clients and our business. Most recently, the passage of the 21st Century Cures Act in December 2016 assuaged some concerns about interoperability and possible U.S. Food and Drug Administration oversight of EHRs, and the ensuing regulations on data blocking and interoperability were released by the Department of Health and Human Services (“HHS”) in March 2020 and became applicable under Office of the National Coordinator for Health Information Technology oversight in April 2021. Additional regulatory clarity will come with the final rule expected shortly from the HHS Office of the Inspector ~~General.~~General, as well as a rule from HHS that will outline disincentives for providers who may be engaged in blocking behaviors. Some aspects of the new regulations will have a significant effect on our business processes and how our clients must exchange patient information. In particular, Allscripts will need to complete development work to satisfy the revised and new certification criterion, and we and our clients will continue making adjustments to business practices associated with information exchange and provision of Electronic Health Information.

Following several high-profile ransomware and other cybersecurity attacks both in and outside the healthcare industry, as well as increased conversation about the expanding use of patient health data outside of HIPAA-covered environments, including through consumer applications, policy makers have taken action affecting Allscripts and our clients and continue to weigh additional legislative and regulatory opportunities. Allscripts remains committed to working to securely protect the patient data within our system and complying with requirements associated with the transmission of patient data to both HIPAA- and non-HIPAA-covered entities.

Please refer to the section entitled “Our Business Overview and Regulatory Environment” in Part II, Item 7 of our Form 10-K for additional information.

Impacts of COVID-19

The global outbreak of the novel coronavirus (COVID-19) has ~~severely restricted the level of~~resulted in volatile economic activity around the world, and the degrees of any economic recovery in various jurisdictions have not been linear. We have been carefully monitoring the COVID-19 pandemic and its impact on our global operations. We are conducting business with certain modifications to employee travel and employee work locations, and have implemented certain cost reduction initiatives, among other modifications. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, partners and stockholders.

Allscripts, along with other health IT vendors, ~~has been~~was asked by the White House, HHS, the ~~CDC,~~Centers for Disease Control and Prevention, and state and local governments to support public health efforts to contain the pandemic by expanding COVID-19 reporting options available to our clients. Our technology has been instrumental to the provision of high-quality care, aiding not only public health surveillance but also in clinical decision support interventions to aid in triage, diagnosis and treatment; information exchange as patients are moved from site to site and/or discharged; predictive analytics based on local data for surge anticipation and vaccine management; and research based on real-world data informing the world’s evolving understanding of post-acute sequelae of COVID-19 ~~syndrome~~ (known colloquially as Long COVID). Allscripts and our clients may also be affected by changed requirements at the Federal, State or Local levels as efforts to modernize public health systems, including technologies, are implemented following the inclusion of associated appropriations within COVID-19-related bills that passed in 2020 and 2021.

~~However, the~~The COVID-19 pandemic negatively impacted revenue for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, as ~~we saw delays~~projects and buying decisions from the prior year were delayed due to the pandemic. However, the negative impact on our business in deals with upfront software revenue and professional services implementations across our inpatient and outpatient base. During 2020, we implemented cost reduction actions across all functional disciplinesthe first quarter of 2022 was minimal compared to the Company, including headcount reductions and temporary salary measures. We believe the cost reduction actions that were implemented in 2020 and our current liquidity provide us with operating and financial flexibility to assist us in navigating through this uncertain environment.

prior year period. The extent to which the COVID-19 pandemic will continue to impact the Company’s results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted. Future developments include ~~new information that may emerge concerning the duration and severity of the COVID-19 pandemic,~~ resurgences or additional “waves” of outbreaks of COVID-19 in various jurisdictions (including new lineages of the virus), the impact of COVID-19 on economic activity, the actions taken by health authorities and policy makers to contain its impacts on public health and the global economy, and the availability, effectiveness and public acceptance of vaccines.

~~Critical Accounting Policies and Estimates~~29

First Quarter 2022 Summary

~~There were no material changes to our critical accounting policies and estimates from those previously disclosed in our Form 10-K.~~

~~Second Quarter 2021 Summary~~

During the ~~second~~first quarter of ~~2021,~~2022, we continued to make progress on our key strategic, financial and operational imperatives, which are aimed at driving higher client satisfaction, increasing operating margins and improving our competitive position by expanding the depth and breadth of our ~~products and integrating recent acquisitions.~~products. Additionally, we believe there are still opportunities to continue to improve our operating leverage and further streamline our operations, and such efforts are ongoing.

Total revenue for the ~~second~~first quarter of ~~2021~~2022 was ~~$374~~$143 million, an increase of $4$9 million compared to the ~~second~~first quarter of ~~2020.~~2021. For the three months ended ~~June 30, 2021, software delivery, support and maintenance~~March 31, 2022, provider revenue and ~~client services~~payer & life sciences revenue were ~~$220~~$119 million and ~~$154~~$24 million, respectively, compared with ~~$224~~$111 million and ~~$146~~$23 million, respectively, during the three months ended ~~June 30, 2020.~~March 31, 2021. Gross profit for the ~~second~~first quarter of ~~2021~~2022 was ~~$152~~$73 million, an increase of ~~$14~~$11 million compared to the ~~second~~first quarter of ~~2020.~~2021. Gross margin increased to ~~40.6%~~51.5% in the ~~second~~first quarter of ~~2021~~2022 compared to a ~~37.3%~~47.1% gross margin in the ~~second~~first quarter of ~~2020.~~2021.

~~Our contract backlog as of June 30, 2021 was $3.9 billion, which decreased compared with our contract backlog of $4.1 billion as of December 31, 2020 and June 30, 2020.~~

Our bookings, which reflect the value of executed contracts for software, hardware, other client services, private cloud hosting, outsourcing and subscription-based services, totaled $180 million for the three months ended June 30, 2021, which represents an increase of 10% over the comparable prior period amount of $164 million ~~and a decrease of 7% from the first quarter 2021 amount of $194 million~~.

Overview of Consolidated Results

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
(In thousands, except percentages)	2021			2020			% Change			2021			2020			% Change			2022			2021			% Change
Revenue:
Software delivery, support and maintenance	$	219,610		$	223,591			(1.8	%)	$	442,301		$	455,731			(2.9	%)
Client services		154,104			145,713			5.8	%		299,765			294,937			1.6	%
Provider																			$	118,665		$	111,170			6.7	%
Payer & Life Sciences																				24,007			22,482			6.8	%
Total revenue		373,714			369,304			1.2	%		742,066			750,668			(1.1	%)		142,672			133,652			6.7	%
Cost of revenue:
Software delivery, support and maintenance		69,303			71,130			(2.6	%)		140,034			144,214			(2.9	%)
Client services		122,597			131,171			(6.5	%)		240,684			279,391			(13.9	%)
Amortization of software development and acquisition-related assets		30,061			29,405			2.2	%		59,550			57,529			3.5	%
Provider																				57,017			58,866			(3.1	%)
Payer & Life Sciences																				12,174			11,869			2.6	%
Total cost of revenue		221,961			231,706			(4.2	%)		440,268			481,134			(8.5	%)		69,191			70,735			(2.2	%)
Gross profit		151,753			137,598			10.3	%		301,798			269,534			12.0	%		73,481			62,917			16.8	%
Gross margin %		40.6	%		37.3	%					40.7	%		35.9	%					51.5	%		47.1	%
Selling, general and administrative expenses		79,090			109,897			(28.0	%)		160,798			202,722			(20.7	%)		41,318			32,164			28.5	%
Research and development		51,219			46,045			11.2	%		100,392			105,422			(4.8	%)		23,420			20,660			13.4	%
Asset impairment charges		5,244			0		NM				5,244			0		NM
Amortization of intangible and acquisition-related assets		5,825			6,321			(7.8	%)		11,649			13,031			(10.6	%)		2,171			2,364			(8.2	%)
Income (loss) from operations		10,375			(24,665	)		142.1	%		23,715			(51,641	)		145.9	%
Income from operations																				6,572			7,729			(15.0	%)
Interest expense		(2,949	)		(10,314	)		(71.4	%)		(6,092	)		(20,979	)		(71.0	%)		(2,136	)		(3,143	)		(32.0	%)
Other income (loss), net		16,757			(875	)	NM				17,794			(353	)	NM
Impairment of long-term investments		0			(550	)		(100.0	%)		0			(550	)		(100.0	%)
Other income, net																				12			798			(98.5	%)
Equity in net (loss) income of unconsolidated investments		(86	)		16,834			(100.5	%)		(64	)		17,034			(100.4	%)		(398	)		22		NM
Income (loss) from continuing operations before income taxes		24,097			(19,570	)	NM				35,353			(56,489	)		162.6	%
Income tax (provision) benefit		(2,192	)		(2,009	)		9.1	%		(4,855	)		2,525		NM
Income from continuing operations before income taxes																				4,050			5,406			(25.1	%)
Income tax benefit (provision)																				14,421			(1,106	)	NM
Effective tax rate		9.1	%		(10.3	%)					13.7	%		4.5	%				NM				20.5	%
Income (loss) from continuing operations, net of tax		21,905			(21,579	)	NM				30,498			(53,964	)		156.5	%
Income from discontinued operations		36			18,838			(99.8	%)		7			35,056			(100.0	%)
Income from continuing operations, net of tax																				18,471			4,300		NM
(Loss) income from discontinued operations																				(5,021	)		5,820			(186.3	%)
Gain on sale of discontinued operations		0			0		NM				647			0		NM				0			647			(100.0	%)
Income tax effect on discontinued operations		(15	)		(4,864	)		(99.7	%)		(169	)		(9,051	)		(98.1	%)		9,407			(1,710	)	NM
Income from discontinued operations, net of tax		21			13,974			(99.8	%)		485			26,005			(98.1	%)		4,386			4,757			(7.8	%)
Net income (loss)	$	21,926		$	(7,605	)	NM			$	30,983		$	(27,959	)	NM
Net income																			$	22,857		$	9,057			152.4	%

NM – We define “NM” as not meaningful for increases or decreases greater than 200%.

Revenue


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2021		2020		% Change			2021		2020		% Change			2022		2021		% Change
Revenue:
Recurring revenue	$	303,644	$	303,196		0.1	%	$	599,292	$	613,177		(2.3	%)
Non-recurring revenue		70,070		66,108		6.0	%		142,774		137,491		3.8	%
Provider															$	118,665	$	111,170		6.7	%
Payer & Life Sciences																24,007		22,482		6.8	%
Total revenue	$	373,714	$	369,304		1.2	%	$	742,066	$	750,668		(1.1	%)	$	142,672	$	133,652		6.7	%

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

~~Recurring~~Provider revenue consists of ~~subscription-based~~revenue derived from software ~~sales, support~~applications for patient engagement and ~~maintenance revenue, recurring transactions revenue~~the sale of EHR software to single-specialty and ~~recurring revenue from managed services solutions, such as outsourcing, private cloud hosting~~small and ~~revenue cycle management. Non-recurring~~mid-sized physician practices, including related clinical, financial, administrative and operational solutions. Payer and life sciences revenue consists of ~~perpetual software licenses sales, hardware resale~~solutions targeted at payers, life sciences companies and ~~non-recurring transactions~~other key healthcare stakeholders.

Provider revenue ~~and project-based client services revenue.~~

~~Recurring revenue was flat~~increased for the three months ended ~~June 30, 2021~~March 31, 2022 compared to the prior year comparable period, reflecting increases in ~~recurring~~ transaction-related revenues and ~~managed services revenues, which were mostly offset by attrition. Recurring~~subscription revenues. Payer and life sciences revenue ~~decreased~~increased for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to the prior year comparable period, primarily due to ~~attrition. The decrease was partially offset by~~ an increase in recurring transaction-related revenues. Non-recurring revenue increased for the three and six months ended June 30, 2021 compared to the prior year comparable periods, primarily due to non-recurring transaction-relatedsubscription revenues and ~~client services revenues. The increase was partially offset by a decrease in~~ upfront software revenues.

The percentage of ~~recurring~~provider and ~~non-recurring~~payer and life sciences revenue of our total revenue was ~~81%~~83% and ~~19%~~17%, respectively, during both the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~82% and 18%, respectively, during both the three and six months ended June 30, 2020.~~2021.

Gross Profit


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
(In thousands, except percentages)	2021			2020			% Change			2021			2020			% Change			2022			2021			% Change
Total cost of revenue	$	221,961		$	231,706			(4.2	%)	$	440,268		$	481,134			(8.5	%)	$	69,191		$	70,735			(2.2	%)
Gross profit	$	151,753		$	137,598			10.3	%	$	301,798		$	269,534			12.0	%	$	73,481		$	62,917			16.8	%
Gross margin %		40.6	%		37.3	%					40.7	%		35.9	%					51.5	%		47.1	%

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Gross profit and margin increased during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the prior year comparable ~~periods,~~period, primarily due to ~~the~~ increase in ~~recurring managed services~~ revenues, ~~the increase~~new business and changes in ~~transaction-related revenues, the decrease in hosting costs and the cost reduction initiatives implemented throughout 2020. The increase was partially offset by attrition.~~revenue mix.

Selling, General and Administrative Expenses


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2021		2020		% Change			2021		2020		% Change			2022		2021		% Change
Selling, general and administrative expenses	$	79,090	$	109,897		(28.0	%)	$	160,798	$	202,722		(20.7	%)	$	41,318	$	32,164		28.5	%

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Selling, general and administrative expenses ~~decreased~~increased during the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, compared with the prior year comparable ~~periods,~~period, primarily due to ~~lower~~higher legal ~~costs and the impact of the cost reduction initiatives implemented throughout 2020.~~costs.

Research and Development


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2021		2020		% Change			2021		2020		% Change			2022		2021		% Change
Research and development	$	51,219	$	46,045		11.2	%	$	100,392	$	105,422		(4.8	%)	$	23,420	$	20,660		13.4	%

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Research and development expenses increased during the three months ended June 30, 2021 compared with the prior year comparable period, primarily due to a decrease in the amount of capitalized software costs. Research and development expenses decreased for the six months ended June 30, 2021March 31, 2022 compared with the prior year comparable period, primarily due to the ~~impact of the cost reduction initiatives implemented throughout 2020.~~

~~Asset Impairment Charges~~

Three Months Ended June 30,

Six Months Ended June 30,
(In thousands)

2021

2020

% Change

2021

2020

% Change
Asset impairment charges

$
5,244

$
0

NM

$
5,244

$
0

NM

~~Three~~increased investment in Veradigm products for both provider and ~~Six Months Ended June 30, 2021 Compared with the Three and Six Months Ended June 30, 2020~~

~~Asset impairment charges for the three and six months ended June 30, 2021 were due to the~~ ~~write-off of deferred costs related to our private cloud hosting operations.~~payer & life sciences.

Amortization of Intangible and Acquisition-related Assets


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2021		2020		% Change			2021		2020		% Change			2022		2021		% Change
Amortization of intangible and acquisition-related assets	$	5,825	$	6,321		(7.8	%)	$	11,649	$	13,031		(10.6	%)	$	2,171	$	2,364		(8.2	%)

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

The decrease in amortization expense for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, compared with the prior year comparable ~~periods,~~period, was due to normal amortization expense and certain intangible assets being fully amortized in ~~2020.~~2021.

Interest Expense


	Three Months Ended June 30,							Six Months Ended June 30,							Three Months Ended March 31,
(In thousands)	2021		2020		% Change			2021		2020		% Change			2022		2021		% Change
Interest expense	$	2,949	$	10,314		(71.4	%)	$	6,092	$	20,979		(71.0	%)	$	2,136	$	3,143		(32.0	%)

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Interest expense decreased during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared to the prior year comparable ~~periods~~period due to ~~lower outstanding debt levels during~~ the ~~current year. The 1.25% Cash~~absence of accreted interest expense in 2022 on the equity component of the 0.875% Convertible Senior Notes. As of January 1, 2022, we adopted 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”, which required us to remove the equity component from Additional paid-in capital. Refer to Note 10, “Debt” of the Notes ~~matured and were repaid~~to Consolidated Financial Statements in ~~full in the third quarter~~Part I, Item 1 of 2020. The senior secured credit facility was repaid in full in the fourth quarter of 2020. In June 2021, we borrowed $250.0 million from the senior secured revolving facility (“Revolving Facility”); however this ~~had a minimal impact on interest expense~~Form 10-Q for ~~the comparable periods.~~additional information.

Other Income, ~~(Loss),~~ Net


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2021		2020			% Change	2021		2020			% Change	2022		2021		% Change
Other income (loss), net	$	16,757	$	(875	)	NM	$	17,794	$	(353	)	NM
Other income, net													$	12	$	798		(98.5	%)

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

O~~ther~~Other income, ~~(loss),~~ net for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ consisted of a combination of interest income and miscellaneous receipts and expenses. The large increase in income in 2021 was primarily due to a $5.0 million distribution received from the Practice Fusion escrow account related to the settlement agreements with the DOJ, a $9.7 million gain as a result of a note conversion and the revaluation of our existing investment with a third-party cost method investment, and a $1.4 million distribution received from a third-party cost method investment.

~~Impairment of Long-term Investments~~

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2021

2020

% Change

2021

2020

% Change

Impairment of long-term investments

$
0

$
(550
)

(100.0
%)

$
0

$
(550
)

(100.0
%)

~~Three and Six Months Ended June 30, 2021 Compared with the Three and Six Months Ended June 30, 2020~~

~~During the three and six months ended June 30, 2020, we recorded a $0.6 million impairment for a third-party equity-method investment.~~

Equity in Net (Loss) Income of Unconsolidated Investments


	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended March 31,
(In thousands)	2021			2020		% Change			2021			2020		% Change			2022			2021		% Change
Equity in net (loss) income of unconsolidated investments	$	(86	)	$	16,834		(100.5	%)	$	(64	)	$	17,034		(100.4	%)	$	(398	)	$	22	NM

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Equity in net (loss) income of unconsolidated investments represents our share of the equity earnings of our investments in third parties accounted for under the equity method of accounting based on a one quarter lag.~~During the three and six months ended June 30, 2020, we recorded a $16.8 million gain from the sale of a third-party equity method investment.~~

Income Taxes


	Three Months Ended June 30,									Six Months Ended June 30,							Three Months Ended March 31,
(In thousands, except percentages)	2021			2020			% Change			2021			2020			% Change	2022		2021			% Change
Income tax (provision) benefit	$	(2,192	)	$	(2,009	)		9.1	%	$	(4,855	)	$	2,525		NM
Income tax benefit (provision)																	$	14,421	$	(1,106	)	NM
Effective tax rate		9.1	%		(10.3	%)					13.7	%		4.5	%		NM			20.5	%

NM - We define “NM” as not meaningful for percentages greater than 200%

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate primarily due to permanent differences, income attributable to foreign jurisdictions taxed at different rates, state taxes, tax credits and certain discrete ~~items.~~items including a windfall benefit of $5.1 million for the three months ended March 31, 2022 and a windfall benefit of $1.0 million for the three months ended March 31, 2021. Our effective tax rate for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, compared with the prior year comparable ~~periods,~~period, differs primarily due to the ~~fact that~~release of valuation allowance of $11.2 million in the three months ended March 31, 2022. In addition, the permanent items, credits and the impact of foreign earnings had more impact on the pre-tax income of ~~$24.1 million and $35.4~~$4.1 million in the three ~~and six~~ months ended ~~June 30, 2021, respectively,~~March 31, 2022, compared to the ~~impacts~~impact of these items on a pre-tax ~~loss~~income of ~~$19.6 million and $56.5~~$5.4 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~March 31, 2021.

Discontinued Operations


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2021			2020			% Change			2021			2020			% Change			2022			2021			% Change
Income from discontinued operations	$	36		$	18,838			(99.8	%)	$	7		$	35,056			(100.0	%)
(Loss) income from discontinued operations																			$	(5,021	)	$	5,820			(186.3	%)
Gain on sale of discontinued operations		0			0		NM				647			0		NM				0			647			(100.0	%)
Income tax effect on discontinued operations		(15	)		(4,864	)		(99.7	%)		(169	)		(9,051	)		(98.1	%)		9,407			(1,710	)	NM
Income from discontinued operations, net of tax	$	21		$	13,974			(99.8	%)	$	485		$	26,005			(98.1	%)	$	4,386		$	4,757			(7.8	%)

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

On March 2, 2022, we entered into the Harris Purchase Agreement (as defined below) to sell substantially all of the assets of our Hospitals and Large Physician Practices Business, including the Sunrise and TouchWorks solutions (the “Hospitals and Large Physician Practices Business”). As of March 31, 2022, the assets and liabilities related to the Harris Purchase Agreement (as defined below) were classified as held for sale on our consolidated balance sheet. The held for sale assets and liabilities are classified as current since, as of March 31, 2022, we expected to complete the sale within the next 12 months. The Hospitals and Large Physician Practices Business classified as held for sale was classified in discontinued operations as the disposition represents a strategic shift that will have a major effect on our operations and financial results. On May 2, 2022, we completed the sale of the Hospitals and Large Physician Practices Business.

On October 15, 2020 and December 31, 2020, we completed the sale of the EPSi and CarePort businesses, respectively. Prior to the sale of EPSi, it was part of the ~~Unallocated~~“Unallocated Amounts” category as it did not meet the requirements to be a reportable segment nor the criteria to be aggregated into our two reportable segments. Prior to the sale of CarePort, it was part of the former Data, Analytics and Care Coordination reportable segment. Both businesses were part of the same strategic initiative and were sold within the same period, and given that the combined sale of EPSi and CarePort represented a strategic shift that had a major effect on our operations and financial results, we reported them together as discontinued operations for all periods presented.

The loss from discontinued operations for the three months ended March 31, 2022 represents the income statement activity related to the Hospitals and Large Physician Practices Business. The income tax effect on discontinued operations for the three months ended March 31, 2022 represents the income tax benefit related to the Hospitals and Large Physician Practices Business.

The income from discontinued operations, ~~during~~net of tax for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 primarily represents the income ~~generated from both EPSi~~statement activity related to the Hospitals and ~~CarePort.~~Large Physician Practices Business. The gain on sale of discontinued operations ~~during~~for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 ~~primarily~~ represents the net working capital adjustments to the gain from the sale of CarePort. The income tax effect on discontinued operations for the three months ended March 31, 2021 primarily represents the income tax expense related to the Hospitals and Large Physician Practices Business. Refer to Note 15, “Discontinued Operations” of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for further information regarding discontinued operations.

Segment Operations

Overview of Segment Results


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2021			2020			% Change			2021			2020			% Change			2022			2021			% Change
Revenue:
Core Clinical and Financial Solutions	$	310,148		$	311,099			(0.3	%)	$	619,313		$	631,431			(1.9	%)
Data, Analytics and Care Coordination		67,860			60,498			12.2	%		131,425			123,929			6.0	%
Veradigm																			$	136,278		$	126,370			7.8	%
Unallocated Amounts		(4,294	)		(2,293	)		87.3	%		(8,672	)		(4,692	)		84.8	%		6,394			7,282			(12.2	%)
Total revenue	$	373,714		$	369,304			1.2	%	$	742,066		$	750,668			(1.1	%)	$	142,672		$	133,652			6.7	%

Gross Profit:
Core Clinical and Financial Solutions	$	118,787		$	108,522			9.5	%	$	238,749		$	208,956			14.3	%
Data, Analytics and Care Coordination		32,966			29,076			13.4	%		63,049			60,578			4.1	%
Veradigm																			$	69,195		$	58,623			18.0	%
Unallocated Amounts		0			0		NM				0			0		NM				4,286			4,294			(0.2	%)
Total gross profit	$	151,753		$	137,598			10.3	%	$	301,798		$	269,534			12.0	%	$	73,481		$	62,917			16.8	%

Income (loss) from operations:
Core Clinical and Financial Solutions	$	11,947		$	(15,834	)		175.5	%	$	29,552		$	(36,546	)		180.9	%
Data, Analytics and Care Coordination		2,875			(8,831	)		132.6	%		3,257			(15,095	)		121.6	%
Veradigm																			$	18,115		$	11,494			57.6	%
Unallocated Amounts		(4,447	)		0		NM				(9,094	)		0		NM				(11,543	)		(3,765	)	NM
Total income (loss) from operations	$	10,375		$	(24,665	)		142.1	%	$	23,715		$	(51,641	)		145.9	%	$	6,572		$	7,729			(15.0	%)

~~Core Clinical and Financial Solutions~~Veradigm

Our ~~Core Clinical and Financial Solutions~~Veradigm segment derives its revenue from the sale of software applications for patient engagement, integrated clinical and financial management solutions, which primarily include EHR-related software, financial and practice management software, related installation, support and maintenance, outsourcing, private cloud hosting and revenue cycle management.

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except percentages)

2021

2020

% Change

2021

2020

% Change

Revenue

$
310,148

$
311,099

(0.3
%)

$
619,313

$
631,431

(1.9
%)
Gross profit

$
118,787

$
108,522

9.5
%

$
238,749

$
208,956

14.3
%
Gross margin %

38.3
%

34.9
%

38.6
%

33.1
%

Income (loss) from operations

$
11,947

$
(15,834
)

175.5
%

$
29,552

$
(36,546
)

180.9
%
Operating margin %

3.9
%

(5.1
%)

4.8
%

(5.8
%)

~~Three and Six Months Ended June 30, 2021 Compared with the Three and Six Months Ended June 30, 2020~~

Core Clinical and Financial Solutions revenue decreased during the three and six months ended June 30, 2021, compared with the prior year comparable periods, primarily due to lower upfront software revenues and attrition.

Gross profit and margin increased during the three and six months ended June 30, 2021, compared with the prior year comparable periods, primarily due to the decrease in hosting costs and the cost reduction initiatives implemented throughout 2020. The increase was partially offset by the previously mentioned attrition.

Income from operations and operating margin increased for the three and six months ended June 30, 2021, compared with the prior year comparable periods, primarily due to the increase in gross profit and the cost reduction initiatives implemented throughout 2020. The increase was partially offset by the asset impairment charges related to ~~our private cloud hosting operations.~~

~~Data, Analytics and Care Coordination~~

~~Our Data, Analytics and Care Coordination segment derives its revenue from the sale of practice reimbursement and~~ payer and life sciences solutions, which are mainly targeted at ~~physician practices,~~ payers, life sciences companies and other key healthcare stakeholders. Additionally, revenue is derived from software applications for patient engagement and the sale of EHR software to single-specialty and small and mid-sized physician practices, including related clinical, financial, administrative and operational solutions. These solutions enable clients to transition, analyze, coordinate care and improve the quality, efficiency and value of healthcare delivery across the entire care community.


	Three Months Ended March 31,
(In thousands)	2022			2021			% Change
Revenue	$	136,278		$	126,370			7.8	%
Gross profit	$	69,195		$	58,623			18.0	%
Gross margin %		50.8	%		46.4	%
Income from operations	$	18,115		$	11,494			57.6	%
Operating margin %		13.3	%		9.1	%

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except percentages)

2021

2020

% Change

2021

2020

% Change

Revenue

$
67,860

$
60,498

12.2
%

$
131,425

$
123,929

6.0
%
Gross profit

$
32,966

$
29,076

13.4
%

$
63,049

$
60,578

4.1
%
Gross margin %

48.6
%

48.1
%

48.0
%

48.9
%

Income (loss) from operations

$
2,875

$
(8,831
)

132.6
%

$
3,257

$
(15,095
)

121.6
%
Operating margin %

4.2
%

(14.6
%)

2.5
%

(12.2
%)

Three ~~and Six~~ Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2020~~March 31, 2021

~~Data, Analytics and Care Coordination~~33

Veradigm revenue increased for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the prior year comparable ~~periods,~~period, due to an increase in subscription and transaction-related revenues. The increase ~~for the six months ended June 30, 2021~~ was partially offset by a decrease in maintenance and client services revenues.

Gross profit and gross margin increased during the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the prior year comparable ~~periods,~~period, primarily due to an increase in revenues, new business and changes in revenue mix. ~~Gross~~

Income from operations and operating margin increased ~~slightly~~ during the three months ended ~~June 30, 2021~~March 31, 2022 compared with the prior year comparable period, primarily due to ~~the previously mentioned items for~~ the increase in gross profit. ~~Gross margin~~The increase was partially offset by higher research and development costs related to the increased investment in Veradigm products for both provider and payer & life sciences.

Unallocated Amounts

The “Unallocated Amounts” category consists of the 2bPrecise business, certain products that were shifted from the previous Core Clinical and Financial Solutions reportable segment due to the organizational changes (“Certain Products”), transfer pricing revenues and certain corporate-related expenses. The amounts included in the “Unallocated Amounts” category for 2bPrecise and Certain Products do not meet the requirements to be reportable segments nor the criteria to be aggregated into our Veradigm reportable segment.


	Three Months Ended March 31,
(In thousands)	2022			2021			% Change
Revenue	$	6,394		$	7,282			(12.2	%)
Gross profit	$	4,286		$	4,294			(0.2	%)
Gross margin %		67.0	%		59.0	%
Loss from operations	$	(11,543	)	$	(3,765	)	NM
Operating margin %		(180.5	%)		(51.7	%)

Three Months Ended March 31, 2022 Compared with the Three Months Ended March 31, 2021

Revenue decreased ~~slightly~~ during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022, compared with the prior year comparable period, primarily due to a decrease in upfront software, subscription and maintenance revenues.

Gross profit was flat during the three months ended March 31, 2022, compared with the prior year comparable period. The decrease to revenues was partially offset by a decrease in cost of revenues related to capitalized software amortization and bonus expense.

Loss from operations increased during the three months ended March 31, 2022, compared with the prior year comparable period, primarily due to higher ~~capitalized software amortization that was slightly offset by the previously mentioned revenue mix.~~legal costs.

Income from operations and operating margin increased during the three and six months ended June 30, 2021 compared with the prior year comparable periods, primarily due to lower capitalized software costs and the cost reduction initiatives implemented throughout 2020.

~~Unallocated Amounts~~

~~The “Unallocated Amounts” category consists of transfer pricing revenues and as of January 1, 2021 also includes certain corporate-related expenses.~~

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except percentages)

2021

2020

% Change

2021

2020

% Change

Revenue

$
(4,294
)

$
(2,293
)

(87.3
%)

$
(8,672
)

$
(4,692
)

(84.8
%)
Gross profit

$
0

$
0

NM

$
0

$
0

NM

Gross margin %

0.0
%

0.0
%

0.0
%

0.0
%

Loss from operations

$
(4,447
)

$
0

NM

$
(9,094
)

$
0

NM

Operating margin %

103.6
%

0.0
%

104.9
%

0.0
%

~~Three and Six Months Ended June 30, 2021 Compared with the Three and Six Months Ended June 30, 2020~~

~~Revenue decreased during the three and six months ended June 30, 2021, compared with the prior year comparable periods, primarily due to an increase in transfer pricing revenues.~~

~~Loss from operations during the three and six months ended June 30, 2021 includes certain general and administrative corporate expenses.~~

~~Contract Backlog~~

~~Contract backlog represents the value of bookings and support and maintenance contracts that have not yet been recognized as revenue. A summary of contract backlog by revenue category is as follows:~~

% Change vs. June 30, 2021

(In millions)

As of
June 30,
2021

As of
December 31, 2020

As of
June 30,
2020

December 31,
2020

June 30,
2020

Software delivery, support and maintenance

$
2,038

$
2,153

$
2,234

(5.3
%)

(8.8
%)
Client services

1,825

1,918

1,898

(4.8
%)

(3.8
%)
Total contract backlog

$
3,863

$
4,071

$
4,132

(5.1
%)

(6.5
%)

Total contract backlog as of June 30, 2021 decreased compared with December 31, 2020 and June 30, 2020. Total contract backlog can fluctuate between periods based on the level of revenue and bookings, as well as the timing and mix of renewal activity and periodic revalidations.

Liquidity and Capital Resources

The primary factors that influence our liquidity include, but are not limited to, the amount and timing of our revenues, cash collections from our clients, capital expenditures and investments in research and development efforts, including investments in or acquisitions of third parties, and divestitures. As of ~~June 30, 2021,~~March 31, 2022, our principal sources of liquidity consisted of cash and cash equivalents of ~~$231~~$84 million and available borrowing capacity of ~~$649~~$724 million under our Revolving Facility. The change in our cash and cash equivalents balance is reflective of the following:

Operating Cash Flow Activities

Six Months Ended June 30,

(In thousands)

2021

2020

$ Change

Net income (loss)

$
30,983

$
(27,959
)

$
58,942

Less: Income from discontinued operations

485

26,005

(25,520
)
    Income (loss) from continuing operations

$
30,498

$
(53,964
)

84,462

Non-cash adjustments to net income (loss)

100,861

100,596

265

Cash impact of changes in operating assets and liabilities

(6,204
)

(66,363
)

60,159

    Net cash provided by (used in) operating activities -
        continuing operations

125,155

(19,731
)

144,886

    Net cash (used in) provided by operating activities -
        discontinued operations

(321,517
)

38,669

(360,186
)
    Net cash (used in) provided by operating activities

$
(196,362
)

$
18,938

$
(215,300
)


	Three Months Ended March 31,
(In thousands)	2022		2021			$ Change
Net income	$	22,857	$	9,057		$	13,800
Less: Income from discontinued operations		4,386		4,757			(371	)
Income from continuing operations	$	18,471	$	4,300			14,171
Non-cash adjustments to net income		784		22,688			(21,904	)
Cash impact of changes in operating assets and liabilities		15,256		(11,818	)		27,074
Net cash provided by operating activities - continuing operations		34,511		15,170			19,341
Net cash provided by (used in) operating activities - discontinued operations		34,750		(10,595	)		45,345
Net cash provided by operating activities	$	69,261	$	4,575		$	64,686

~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021

Net cash provided by operating activities – continuing operations increased during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared with the prior year comparable period. The increase in net income ~~(loss)~~ for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 reflects ~~cost savings related~~a deferred tax benefit and the releases of certain valuation allowances.Non-cash adjustments to ~~the cost reduction initiatives implemented throughout 2020,~~ the distribution received from the Practice Fusion escrow account related to the settlement agreements with the DOJ, the investment gain and distribution received from our third-party cost method investments and ~~lower interest expense,~~net income decreased primarily due to the ~~repayment of the~~ ~~1.25% Cash Convertible Senior Notes~~change in deferred taxes and lower depreciation and amortization expense. The decrease was partially offset due to higher~~the senior secured credit facility~~

~~in the third and fourth quarters of 2020, respectively.~~ 34Net income (loss) and cash impact of changes in operating assets and liabilities for the six months ended June 30, 2020 reflects $73 million of payments related to the settlement agreements with the DOJ.

stock-based compensation expense. The increase in cash impact of changes in operating assets and liabilities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~partially offset by~~primarily a result of working capital changes. ~~Non-cash adjustments~~

The change from net cash used in operating activities – discontinued operations for the three months ended March 31, 2021 to net income (loss) increased primarily due to the absence of equity in net income of unconsolidated investments and the asset impairment charges related to our private cloud hosting operations. The increase was partially offset by lower depreciation and amortization expenses and a lower non-cash lease expense.

~~Net~~ cash provided by operating activities – discontinued operations ~~decreased during~~for the ~~six~~three months ended ~~June 30, 2021 compared with the prior year comparable period~~March 31, 2022 was primarily due to the tax payment relating to the gain from the sale of CarePort on December 31, 2020. ~~Additionally, both EPSi~~The Hospitals and ~~CarePort~~Large Physician Practices Business generated cash from operations ~~during~~in both the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2022 and 2021.

Investing Cash Flow Activities


	Six Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2021			2020			$ Change			2022			2021			$ Change
Capital expenditures	$	(3,094	)	$	(4,778	)	$	1,684		$	(345	)	$	(225	)	$	(120	)
Capitalized software		(35,472	)		(50,912	)		15,440			(9,600	)		(8,148	)		(1,452	)
Cash received from sale of businesses, net of cash divested		952			0			952
Cash paid for business acquisitions, net of cash acquired											(24,106	)		0			(24,106	)
Sale of businesses and other investments, net of cash divested, and distributions received											1,083			1,753			(670	)
Purchases of equity securities, other investments and related intangible assets, net		(221	)		(3,823	)		3,602			0			(221	)		221
Sale of other investments		1,919			23,254			(21,335	)
Distributions received from investments		1,371			0			1,371
Net cash used in investing activities - continuing operations		(34,545	)		(36,259	)		1,714			(32,968	)		(6,841	)		(26,127	)
Net cash used in investing activities - discontinued operations		0			(4,447	)		4,447			(11,231	)		(12,148	)		917
Net cash used in investing activities	$	(34,545	)	$	(40,706	)	$	6,161		$	(44,199	)	$	(18,989	)	$	(25,210	)

~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021

Net cash used in investing activities – continuing operations ~~decreased~~increased during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared with the prior year comparable period. The ~~decrease~~increase in the use of cash during ~~2021~~2022 was primarily due to ~~a decrease in capitalized software costs and a decrease in~~ the ~~sale of investments.~~cash paid for the Babel Health acquisition.

Net cash used in investing activities – discontinued operations during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2022 and 2021 primarily reflects spending for ~~capital expenditures and~~ capitalized software costs related to the ~~EPSi~~Hospitals and ~~CarePort businesses that were sold during the fourth quarter of 2020.~~Large Physician Practices Business.

Financing Cash Flow Activities


	Six Months Ended June 30,									Three Months Ended March 31,
(In thousands)	2021			2020			$ Change			2022			2021			$ Change
Taxes paid related to net share settlement of equity awards	$	(13,887	)	$	(5,533	)	$	(8,354	)	$	(13,275	)	$	(4,723	)	$	(8,552	)
Payments for issuance costs on 0.875% Convertible Senior Notes		0			(758	)		758
Repayment of Convertible Senior Notes		0			(7,361	)		7,361
Credit facility payments		0			(167,500	)		167,500			(25,000	)		0			(25,000	)
Credit facility borrowings, net of issuance costs		250,000			285,000			(35,000	)		25,000			0			25,000
Repurchase of common stock		(108,953	)		(9,714	)		(99,239	)		(49,679	)		0			(49,679	)
Accelerated share repurchase program		(200,000	)		0			(200,000	)
Intercompany to/from parent/subsidiaries											11,685			28,373			(16,688	)
Payment of acquisition and other financing obligations		(2,400	)		(4,369	)		1,969			0			(1,542	)		1,542
Net cash (used in) provided by financing activities	$	(75,240	)	$	89,765		$	(165,005	)
Net cash (used in) provided by financing activities - continuing operations											(51,269	)		22,108			(73,377	)
Net cash used in financing activities - discontinued operations											(11,697	)		(29,622	)		17,925
Net cash used in financing activities										$	(62,966	)	$	(7,514	)	$	(55,452	)

~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared with the ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021

~~Net~~The change from net cash provided by financing activities - continuing operations for the three months ended March 31, 2021 to net cash used in financing activities ~~increased during~~for the ~~six~~three months ended ~~June 30, 2021, compared with the prior year comparable period. The increase~~March 31, 2022 was primarily a result of ~~the payment made to the accelerated share purchase program,~~ the repurchase of common stock on the open market and ~~lower~~higher credit facility ~~borrowings~~payments in ~~2021. The increase was~~2022, which were partially offset by the credit facility ~~payments made~~borrowings in ~~2020.~~2022.

Net cash used in financing activities - discontinuing operations during both the three months ended March 31, 2022 and 2021 primarily reflect lower cash for operations for the Hospitals and Large Physician Practices Business.

Future Capital Requirements

We enter into obligations with third parties in the ordinary course of business. These future cash obligations will be funded from future cash flows from the sale of our products and services. The material cash requirements include the following ~~table summarizes future payments~~contractual and other obligations.

Debt Obligations

As of March 31, 2022, we had outstanding convertible senior notes and borrowings under the ~~0.875% Convertible Senior Notes and~~ Revolving Facility in an aggregate principal amount of $382.9 million, which were fully due on their respective maturity dates.

On April 29, 2022, we amended and restated the Revolving Facility to provide for a new $700 million senior secured revolving facility with a five year term (the “New Revolving Facility”). On May 2, 2022 we used proceeds from the sale of the Hospitals and Large Physician Practices Business to repay the outstanding amount under the New Revolving Facility ($175 million principal amount).

During the quarter ended December 31, 2021, the conditional conversion feature of the convertible senior notes was triggered as a result of the sale price of Allscripts' common stock being greater than or equal to 130% of the conversion price for the requisite period during such quarter. As a result, holders of the convertible senior notes were entitled to convert the notes into common stock at their option at any time during the quarter ending March 31, 2022. If we do not elect to satisfy our conversion obligation by delivering solely shares of our common stock, then we will settle a portion or all of our conversion obligations through the payment of cash. Our capped call transactions may help reduce the potential dilution to Allscripts' common stock upon any conversion of the notes and/or may help to offset any cash payments Allscripts is required to make in excess of the principal amount of the converted notes upon conversion. As of March 31, 2022, none of the convertible senior notes have been converted.

Non-cancelable Operating Leases

We have lease arrangements for certain facilities. As of March 31, 2022, we had fixed lease payment obligations of $22.7 million, with $6.6 million payable within the next 12 months.

Purchase Obligations

Purchase obligations consist of minimum purchase commitments for Microsoft services, computer equipment, maintenance, consulting and other commitments. As of March 31, 2022, we had purchase obligations of $38.2 million, with approximately $16.7 million payable within the next 12 months.

Letters of Credit

As of March 31, 2022, we had $1.0 million letters of credit outstanding under the Second Amended Credit Agreement. On April 29, 2022, we entered into the Third Amended Credit Agreement, and a total of up to $50 million of the New Revolving Facility thereunder is available for the issuance of letters of credit.

Income Taxes

Our liability for uncertain tax positions was $30.0 million as of ~~June 30, 2021:~~March 31, 2022. It is uncertain the amount that is payable within the next 12 months for liabilities that may result from this exposure, as we cannot predict, with reasonable reliability, the outcome of discussions with the respective taxing jurisdictions, which may or may not result in cash settlements.

(In thousands)

Total

Remainder of 2021

2022

2023

2024

2025

Thereafter

Principal payments:

0.875% Convertible Senior Notes ⁽¹⁾

$
207,911

$
0

$
0

$
0

$
0

$
0

$
207,911

Revolving Facility ⁽²⁾

250,000

0

0

250,000

0

0

0

Total principal payments

457,911

0

0

250,000

0

0

207,911

Interest payments:

0.875% Convertible Senior Notes

10,915

910

1,819

1,819

1,819

1,819

2,729

Revolving Facility ^{(2) (3)}

11,470

3,277

6,554

1,639

0

0

0

Total interest payments

22,385

4,187

8,373

3,458

1,819

1,819

2,729

Total future debt payments

$
480,296

$
4,187

$
8,373

$
253,458

$
1,819

$
1,819

$
210,640

~~(1)~~

~~Amount represents the face value of the 0.875% Convertible Senior Notes, which includes both the liability and equity portions.~~

~~(2)~~

Assumes no additional borrowings after June 30, 2021, payment of any required periodic installments of principal and that all drawn amounts are repaid upon maturity. Amounts include unused fees related to the unused available borrowing capacity on the Revolving Facility.

~~(3)~~

~~Assumes LIBOR plus the applicable margin remain constant at the rate in effect on June 30, 2021, which was 1.60%.~~

Other Matters Affecting Future Capital Requirements

Our total investment in research and development is expected to ~~decline~~increase in ~~2021~~2022 as the Company ~~continues to benefit from margin improvement initiatives that commenced~~makes continued investments in ~~2020.~~expanding the capabilities and functionality of our Veradigm provider, payer and life sciences solutions. Our total spending consists of research and development costs directly recorded to expense, which are offset by the capitalization of eligible development costs.

We believe that our cash and cash equivalents of ~~$231~~$84 million as of ~~June 30, 2021,~~March 31, 2022, our future cash flows, the proceeds received from the sale of the Hospitals and Large Physician Practices Business, our borrowing capacity under our New Revolving Facility and access to capital markets, taken together, provide adequate resources to meet future operating needs as well as scheduled payments of short and long-term debt. We cannot provide assurance that our actual cash requirements will not be greater than we expect as of the date of this Form 10-Q. We will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies and the repurchase of our common stock under our stock repurchase ~~programs,~~program, any of which might impact our liquidity requirements or cause us to borrow additional amounts under our New Revolving Facility or issue additional equity or debt securities.

~~Contractual Obligations, Commitments and Off-Balance Sheet Arrangements~~

~~We have various contractual obligations, which are recorded as liabilities in our consolidated financial statements. During the six months ended June 30, 2021,~~ ~~there~~Critical Accounting Estimates

There were no material changes ~~outside of the ordinary course of business,~~ to our ~~contractual obligations and purchase commitments~~critical accounting estimates from those previously disclosed in our Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Form 10-K have not changed materially during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Item 4. Controls and Procedures

~~Item 4.~~

~~Controls and Procedures~~

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the end of the period covered by this Form 10-Q.

Based on management’s evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures are designed to, and were effective as of ~~June 30, 2021~~March 31, 2022 to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~June 30, 2021,~~March 31, 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Item 1.~~

~~Legal Proceedings~~

We hereby incorporate by reference Note 14, “Contingencies,” of the Notes to Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

~~Item 1A.~~

~~Risk Factors~~

There have been no material changes during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from the risk factors as previously disclosed in our Form 10-K.

~~Item 2.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 23, 2021, the Company issued 33,321 shares of common stock to a commercial partner pursuant to the terms of, and in exchange for entering, an existing commercial agreement between the parties. The shares of common stock have been offered and sold pursuant to Section 4(a)(2) of the Securities Act of 1933.

On November 18, 2020, we announced that our Board of Directors approved a stock repurchase program (the “2020 Program”) under which we may repurchase up to $300 million of our common stock through December 31, 2021. The 2020 Program replaced a previous program. During the three months ended June 30, 2021, we repurchased 5.6 million shares of our common stock under the 2020 Program. This is inclusive of the shares we received at final settlement of the accelerated share repurchase program we entered into on November 30, 2020, described below.

~~On May 26, 2021,~~January 24, 2022, we announced that our Board of Directors approved a new stock purchase program (the ~~“2021~~“2022 Program”) under which we may repurchase up to ~~$350~~$250 million of our common ~~stock.~~stock, with no termination date. The ~~2021~~2022 Program replaced ~~the 2020 Program and does not have~~ a ~~termination date. During the three months ended June 30, 2021, we repurchased 11.5 million shares of~~previous program approved by our ~~common stock under the 2021 Program. This is inclusive of the shares we received at initial settlement of the accelerated share repurchase program entered into on June 14, 2021, described below.~~

On November 30, 2020, we entered into separate Master Confirmations (each, a “Master Confirmation”) and Supplemental Confirmations (each, together with the related Master Confirmation, an “ASR Agreement”), with JPMorgan Chase Bank, National Association and Wells Fargo Bank, National Association (each, an “ASR Counterparty”, or collectively, the “ASR Counterparties”), to purchase shares of our common stock for a total payment of $200.0 million (the “Prepayment Amount”). Under the terms of the ASR Agreements, on November 30, 2020, we paid the Prepayment Amount to the ASR Counterparties and received on December 2, 2020 an initial delivery of approximately 11.7 million shares of our common stock, which is approximately 80% of the total number of shares that could be repurchased under the ASR Agreements if the final purchase price per share equaled the closing price of our common stock on November 30, 2020. The total number of shares received under the ASR Agreements, after final settlement, was based on the average daily volume weighted average price of our common stock during the repurchase period, less an agreed upon discount. Final settlement of the ASR Agreements occurredBoard in ~~May 2021, resulting in the receipt of 1.6 million additional shares, which yielded a weighted-average share repurchase price of approximately $15.07 for the repurchase period.~~

At final settlement, depending on the final purchase price per share, the ASR Counterparties may be required to deliver additional shares of our common stock to the Company, or, under certain circumstances, we may be required to make a cash payment to each ASR Counterparty or may elect to deliver the equivalent value in shares of our common stock. The final purchase price per share under each June 2021 ASR Agreement will generally be based on the average of daily volume weighted average prices of shares of our common stock during a term set forth in the June 2021 ASR Agreements. The June 2021 ASR Agreements contain provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances generally under which the June 2021 ASR Agreements may be accelerated, extended or terminated early by the ASR Counterparties and various acknowledgments, representations and warranties made by the parties to one another. Final settlement of the June 2021 ASR Agreements is expected to be completed during the fourth quarter of 2021, although the settlement may be accelerated at the ASR Counterparties’ option.

Any future stock repurchase transactions may be made through open market transactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means, subject to market conditions. Any repurchase activity will depend on many factors such as our working capital needs, cash requirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of our common stock, and other factors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

The following table ~~summarize~~summarizes the stock repurchase activity during the three months ended ~~June 30, 2021~~March 31, 2022 and the approximate dollar value of shares that may yet be purchased under our stock repurchase program:


(In thousands, except per share amounts)
					Total Number		Approximate
					Of Shares		Dollar Value
					Purchased		Of Shares
					As Part Of		That May Yet
	Total		Average		Publicly		Be Purchased
	Number		Price		Announced		Under The
	Of Shares		Paid Per		Plans Or		Plans Or
Period (Based on Trade Date)	Purchased		Share(1)		Programs		Programs
01/01/22—01/31/22		0	$	0.00		0	$	250,000
02/01/22—02/28/22		0	$	0.00		0	$	250,000
03/01/22—03/31/22		2,313	$	21.46		2,313	$	200,367
		2,313	$	21.46		2,313

(In thousands, except per share amounts)

Total Number

Approximate

Of Shares

Dollar Value

Purchased

Of Shares

As Part Of

That May Yet

Total

Average

Publicly

Be Purchased

Number

Price

Announced

Under The

Of Shares

Paid Per

Plans Or

Plans Or

Period (Based on Trade Date)

Purchased

Share⁽¹⁾⁽²⁾

Programs

Programs

04/01/21—04/30/21

-

$
-

-

$
67,196

05/01/21—05/31/21

5,910

$
16.67

5,910

$
344,921

06/01/21—06/30/21

11,164

$
17.72

11,164

$
108,361

17,074

$
17.01

17,074

(1)

Excludes broker commissions in the case of open market transactions, if any.

~~(1)~~

~~Average price paid per share excludes effect of accelerated share repurchases. See additional disclosure above regarding our accelerated share repurchase activity during the second quarter of 2021.~~

~~(2)~~

~~Excludes broker commissions in the case of open market transactions.~~

~~Item 5.~~

~~Other Information~~

~~Lisa Khorey will no longer serve as the Company’s Executive Vice President, Chief Client Delivery Officer, effective August 5, 2021 (the “Effective Date”).~~

On the Effective Date, the Company and Ms. Khorey entered into an amendment (the “Amendment”) to Ms. Khorey’s employment agreement with the Company, effective as of November 1, 2016 (the “Employment Agreement”). Pursuant to the Amendment, during a transition period from the Effective Date through March 1, 2022, Ms. Khorey will serve in the role of Executive Consultant to the Company on a part-time basis. If the Company does not elect to renew Ms. Khorey’s employment upon the expiration of the transition period, such nonrenewal will constitute a termination of Ms. Khorey’s employment by the Company without Cause (as defined in the Employment Agreement), and Ms. Khorey will be eligible for severance benefits in accordance with the terms of the Employment Agreement. During the transition period, Ms. Khorey will not be eligible for a performance bonus for calendar year 2021 and Ms. Khorey’s base salary will be $103,400 per annum, except that her base salary in effect prior to the Effective Date will apply for purposes of determining any severance benefits payable to Ms. Khorey following a termination of her employment. The foregoing summary is qualified in its entirety by reference to the complete text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 10-Q and is incorporated by reference herein.37

Item 6. Exhibits


Exhibit Number	~~Exhibits~~

~~Exhibit Number~~		Exhibit Description	~~Exhibit Description~~	Filed Herewith	~~Filed Herewith~~	Furnished Herewith
~~10.1~~2.1	†		~~First Amendment to the Employment~~Purchase Agreement, ~~between~~dated as of March 2, 2022, by and among Allscripts Healthcare Solutions, Inc., a Delaware corporation, Allscripts Healthcare, LLC, a North Carolina limited liability company, Allscripts Software, LLC, a Delaware limited liability company, PF2 EIS LLC, a Delaware limited liability company, Allscripts IHC, LLC, a Delaware limited liability company, Allscripts Healthcare US, LP, a Delaware limited partnership, Harris Dawn Holdings Inc., a Delaware corporation, and, ~~Lisa Khorey~~solely for purposes of Article VI and Section 12.18 thereof, Constellation Software Inc., an Ontario corporation (incorporated by reference to Exhibit 2.1 to Form 8-K filed with the SEC on March 4, 2022).		X

~~31.1~~10.1			Third Amended and Restated Credit Agreement, dated as of April 29, 2022, among Allscripts Healthcare Solutions, Inc., Allscripts Healthcare, LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on May 2, 2022).

31.1			Rule 13a - 14(a) Certification of Chief Executive Officer		X

31.2			Rule 13a - 14(a) Certification of Chief Financial Officer		X

32.1			Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer			X

101.INS			Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline document		X

101.SCH			Inline XBRL Taxonomy Extension Schema		X

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase		X

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase		X

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase		X

101.DEF			Inline XBRL Taxonomy Definition Linkbase		X

104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, formatted in Inline XBRL and included in Exhibit 101.		X

†

~~Indicates management contract or compensatory plan.~~

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

By:		/s/ Richard J. Poulton
		Richard J. Poulton
		~~President and~~ Chief ~~Financial~~Executive Officer
		(~~Principal Financial and Accounting Officer and~~ Duly Authorized Officer)

Date: ~~August 6, 2021~~May 9, 2022


By:		/s/ Leah S. Jones
		Leah S. Jones
		Chief Financial Officer

Date: May 9, 2022


(In thousands, except per share amounts)	June 30, 2021		December 31, 2020		March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	229,254	$	531,104	$	82,782	$	132,517
Restricted cash		2,129		6,361		1,305		1,308
Accounts receivable, net of allowance of $31,991 and $31,596 as of June 30, 2021 and December 31, 2020, respectively		338,587		347,355
Contract assets, net of allowance of $1,068 as of June 30, 2021 and December 31, 2020		120,051		106,717
Income tax receivable		0		25,421
Accounts receivable, net of allowance of $13,773 and $13,360 as of March 31, 2022 and December 31, 2021, respectively						170,497		171,622
Contract assets, net of allowance of $576 as of March 31, 2022 and December 31, 2021						55,162		63,429
Prepaid expenses and other current assets		150,968		136,264		56,191		60,511
Assets held for sale						1,174,747		1,125,111
Total current assets		840,989		1,153,222		1,540,684		1,554,498
Fixed assets, net		59,077		72,162		9,299		9,819
Software development costs, net		182,848		193,202		78,334		74,688
Intangible assets, net		261,258		286,602		158,285		149,690
Goodwill		974,834		974,729		520,187		506,607
Deferred taxes, net		5,872		5,790		6,078		0
Contract assets - long-term, net of allowance of $4,273 as of June 30, 2021 and December 31, 2020		49,849		43,682
Contract assets - long-term, net of allowance of $1,534 as of March 31, 2022 and December 31, 2021						19,198		28,174
Right-of-use assets - operating leases		75,052		96,601		16,776		18,324
Other assets		90,521		91,628		81,414		83,429
Total assets	$	2,540,300	$	2,917,618	$	2,430,255	$	2,425,229


(In thousands, except per share amounts)	June 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	26,782		$	35,905		$	15,548		$	5,281
Accrued expenses		88,780			100,262			61,829			54,518
Accrued compensation and benefits		94,185			118,771			18,027			31,055
Deferred revenue		364,000			334,764			106,491			120,748
Current operating lease liabilities		19,662			22,264			5,972			6,133
Current liabilities attributable to discontinued operations		2,670			322,811
Liabilities related to assets held for sale								438,988			380,253
Total current liabilities		596,079			934,777			646,855			597,988
Long-term debt		421,312			167,587			377,059			350,062
Deferred revenue		2,862			3,471			3,590			1,839
Deferred taxes, net		17,797			18,186			0			16,625
Long-term operating lease liabilities		71,597			93,463			15,241			16,754
Other liabilities		37,179			33,891			34,404			33,823
Total liabilities		1,146,826			1,251,375			1,077,149			1,017,091
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.01 par value, 1,000 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020		0			0
Common stock: $0.01 par value, 349,000 shares authorized as of June 30, 2021 and December 31, 2020; 276,668 and 125,011 shares issued and outstanding as of June 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, 151,657 and 134,616 shares as of June 30, 2021 and December 31, 2020, respectively		(1,174,498	)		(870,558	)
Preferred stock: $0.01 par value, 1,000 shares authorized, 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021								0			0
Common stock: $0.01 par value, 349,000 shares authorized as of March 31, 2022 and December 31, 2021; 277,696 and 114,792 shares issued and outstanding as of March 31, 2022, respectively; 276,705 and 116,114 shares issued and outstanding as of December 31, 2021, respectively								2,776			2,766
Treasury stock: at cost, 162,904 and 160,591 shares as of March 31, 2022 and December 31, 2021, respectively								(1,371,484	)		(1,321,805	)
Additional paid-in capital		1,903,542			1,902,776			1,922,026			1,962,386
Retained earnings		664,101			633,118			802,890			767,556
Accumulated other comprehensive loss		(2,437	)		(1,838	)		(3,102	)		(2,765	)
Total stockholders’ equity		1,393,474			1,666,243			1,353,106			1,408,138
Total liabilities and stockholders’ equity	$	2,540,300		$	2,917,618		$	2,430,255		$	2,425,229


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(In thousands)	2021			2020			2021			2020			2022			2021
Number of common shares
Balance at beginning of period		275,241			273,484			274,558			272,609			276,705			274,558
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		1,427			979			2,110			1,854			991			683
Balance at end of period		276,668			274,463			276,668			274,463			277,696			275,241
Common stock
Balance at beginning of period	$	2,751		$	2,733		$	2,745		$	2,725		$	2,766		$	2,745
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		15			10			21			18			10			6
Balance at end of period	$	2,766		$	2,743		$	2,766		$	2,743		$	2,776		$	2,751
Number of treasury stock shares
Balance at beginning of period		(134,616	)		(111,583	)		(134,616	)		(110,134	)		(160,591	)		(134,616	)
Issuance of treasury stock		33			90			33			90
Purchase of treasury stock		(6,397	)		0			(6,397	)		(1,449	)		(2,313	)		0
Accelerated share repurchase program		(10,677	)		0			(10,677	)		0
Balance at end of period		(151,657	)		(111,493	)		(151,657	)		(111,493	)		(162,904	)		(134,616	)
Treasury stock
Balance at beginning of period	$	(870,558	)	$	(580,871	)	$	(870,558	)	$	(571,157	)	$	(1,321,805	)	$	(870,558	)
Issuance of treasury stock		465			1,193			465			1,193
Purchase of treasury stock		(108,953	)		0			(108,953	)		(9,714	)		(49,679	)		0
Accelerated share repurchase program		(195,452	)		0			(195,452	)		0
Balance at end of period	$	(1,174,498	)	$	(579,678	)	$	(1,174,498	)	$	(579,678	)	$	(1,371,484	)	$	(870,558	)
Additional paid-in capital
Balance at beginning of period	$	1,906,534		$	1,914,816		$	1,902,776		$	1,907,348		$	1,962,386		$	1,902,776
Stock-based compensation		8,383			7,166			17,084			17,120			10,822			8,701
Common stock issued under stock compensation plans, net of shares withheld for employee taxes		(7,932	)		(2,376	)		(13,912	)		(5,544	)		(13,301	)		(5,980	)
Capped call transactions		0			797			0			797
Accelerated share repurchase program		(4,548	)		0			(4,548	)		0
Issuance of treasury stock		69			(440	)		69			(440	)
ASU 2020-06 implementation adjustments														(38,918	)		0
Warrants issued		1,036			682			2,073			1,364			1,037			1,037
Balance at end of period	$	1,903,542		$	1,920,645		$	1,903,542		$	1,920,645		$	1,922,026		$	1,906,534
Retained earnings (accumulated deficit)
Retained earnings
Balance at beginning of period	$	642,175		$	(87,643	)	$	633,118		$	(49,336	)	$	767,556		$	633,118
Net income (loss)		21,926			(7,605	)		30,983			(27,959	)
ASU 2016-13 implementation adjustments		0			0			0			(17,953	)
Net income														22,857			9,057
ASU 2020-06 implementation adjustments														12,477			0
Balance at end of period	$	664,101		$	(95,248	)	$	664,101		$	(95,248	)	$	802,890		$	642,175
Accumulated other comprehensive loss
Balance at beginning of period	$	(2,244	)	$	(7,255	)	$	(1,838	)	$	(4,392	)	$	(2,765	)	$	(1,838	)
Foreign currency translation adjustments, net		421			918			520			(1,594	)		(150	)		99
Unrecognized gain (loss) on derivatives qualifying as cash flow hedges, net of tax		(614	)		804			(1,119	)		453			(187	)		(505	)
Balance at end of period	$	(2,437	)	$	(5,533	)	$	(2,437	)	$	(5,533	)	$	(3,102	)	$	(2,244	)
Total Stockholders’ Equity at beginning of period	$	1,678,658		$	1,241,780		$	1,666,243		$	1,285,188		$	1,408,138		$	1,666,243
Total Stockholders’ Equity at end of period	$	1,393,474		$	1,242,929		$	1,393,474		$	1,242,929		$	1,353,106		$	1,678,658


(In thousands)	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Operating lease cost ⁽¹⁾	$	5,636		$	6,261		$	11,697		$	13,014		$	1,690		$	1,931
Less: Sublease income		(74	)		(166	)		(157	)		(769	)		(33	)		(83	)
Total operating lease costs	$	5,562		$	6,095		$	11,540		$	12,245		$	1,657		$	1,848


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer		☐

~~Non-accelerated filer~~	☐		~~Smaller reporting company~~		☐
Non-accelerated filer	☐	Smaller reporting company		☐

		Emerging growth company		☐


		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	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3837
Item 4.	Controls and Procedures	3837
PART II. OTHER INFORMATION		3837
Item 1.	Legal Proceedings		3837
Item 1A.	Risk Factors	3837
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
~~Item 5.~~SIGNATURES		~~Other Information~~		40
~~Item 6.~~	~~Exhibits~~	40
~~SIGNATURES~~		4139

(In thousands)	Three Months Ended March 31, 2020		Three Months Ended June 30, 2020
Revenue related to deferred revenue balance at beginning of period	$	105,366	$	119,545
Revenue related to new performance obligations satisfied during the period		216,580		195,308
Revenue recognized under "right-to-invoice" expedient		58,059		54,082
Reimbursed travel expenses, shipping and other revenue		1,359		369
Total revenue	$	381,364	$	369,304

	Three Months Ended June 30, 2021
(In thousands)	Core Clinical and Financial Solutions		Data, Analytics and Care Coordination		Unallocated Amounts			Total
Software delivery, support and maintenance	$	158,754	$	65,150	$	(4,294	)	$	219,610
Client services		151,394		2,710		0			154,104
Total revenue	$	310,148	$	67,860	$	(4,294	)	$	373,714

	Three Months Ended June 30, 2020
(In thousands)	Core Clinical and Financial Solutions		Data, Analytics and Care Coordination		Unallocated Amounts			Total
Software delivery, support and maintenance	$	167,220	$	58,664	$	(2,293	)	$	223,591
Client services		143,879		1,834		0			145,713
Total revenue	$	311,099	$	60,498	$	(2,293	)	$	369,304

	Six Months Ended June 30, 2021
(In thousands)	Core Clinical and Financial Solutions		Data, Analytics and Care Coordination		Unallocated Amounts			Total
Software delivery, support and maintenance	$	323,964	$	127,009	$	(8,672	)	$	442,301
Client services		295,349		4,416		0			299,765
Total revenue	$	619,313	$	131,425	$	(8,672	)	$	742,066

	Six Months Ended June 30, 2020
(In thousands)	Core Clinical and Financial Solutions		Data, Analytics and Care Coordination		Unallocated Amounts			Total
Software delivery, support and maintenance	$	341,301	$	119,122	$	(4,692	)	$	455,731
Client services		290,130		4,807		0			294,937
Total revenue	$	631,431	$	123,929	$	(4,692	)	$	750,668


	March 31, 2022
(In thousands)	Operating Leases
Remainder of 2022	$	4,945
2023		6,317
2024		3,602
2025		3,440
2026		2,835
Thereafter		1,581
Total lease liabilities		22,720
Less: Amount representing interest		(1,507	)
Less: Short-term lease liabilities		(5,972	)
Total long-term lease liabilities	$	15,241

	June 30,
(In thousands)	2021		2020
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	229,254	$	199,004
Restricted cash		2,129		6,194
Total cash, cash equivalents and restricted cash	$	231,383	$	205,198

	Six Months Ended June 30,
(In thousands)	2021		2020
Supplemental non-cash information:
Issuance of treasury stock to commercial partner	$	534	$	752

							% Change vs. June 30, 2021
(In millions)	As of June 30, 2021		As of December 31, 2020		As of June 30, 2020		December 31, 2020			June 30, 2020
Software delivery, support and maintenance	$	2,038	$	2,153	$	2,234		(5.3	%)		(8.8	%)
Client services		1,825		1,918		1,898		(4.8	%)		(3.8	%)
Total contract backlog	$	3,863	$	4,071	$	4,132		(5.1	%)		(6.5	%)

(In thousands)	Total		Remainder of 2021		2022		2023		2024		2025		Thereafter
Principal payments:
0.875% Convertible Senior Notes ⁽¹⁾	$	207,911	$	0	$	0	$	0	$	0	$	0	$	207,911
Revolving Facility ⁽²⁾		250,000		0		0		250,000		0		0		0
Total principal payments		457,911		0		0		250,000		0		0		207,911
Interest payments:
0.875% Convertible Senior Notes		10,915		910		1,819		1,819		1,819		1,819		2,729
Revolving Facility ^{(2) (3)}		11,470		3,277		6,554		1,639		0		0		0
Total interest payments		22,385		4,187		8,373		3,458		1,819		1,819		2,729
Total future debt payments	$	480,296	$	4,187	$	8,373	$	253,458	$	1,819	$	1,819	$	210,640