MDRX - Earnings call transcript Q2 2018

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Operator

Greetings and welcome to the Allscripts' Second Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Stephen Shulstein. you. Thank

begin. may You

Stephen Shulstein

much. XXXX and Earnings very Allscripts to Second Quarter Conference Good you welcome afternoon the Thank Call.

financial Chief and Our Allscripts' speakers future forward-looking Please our part and call as Olis, statements filings tables workbook President; the presentation number of Chief affect the Rick Black, Relations We'll website. our as or Dennis information Q&A Executive Officer; in new well and during making today Rick Poulton, descriptions factors of are supplemental a Financial both on Officer. Paul release and be going risk our this our results. to undertake that release SEC the Please number of a I'm obligation of over more of expectations the statements and detailed could that, events. our these earnings our non-GAAP in to call. refer cause involve our the reference may forward-looking available non-GAAP These hand earnings to We statements light are And based vary actual the revise Investor to results that are and no for current and uncertainties that materially. the on statements Poulton. risks with GAAP

Richard J. Poulton

two Good cover Okay. key time today. We topics and for everybody appreciate afternoon, Thanks, to joining today. Stephen. your I'm Allscripts. your thanks and our going call interest in

important highlight thoughts I'll I'll we on make make and and portfolio. of quarter in some couple comments current around achievements First, the some comments And a summary saw performance our quarter. then, second

earnings XX% in $XXX non-GAAP share growth and to earnings a million, $XXX pleased We're quarter GAAP non-GAAP basis, revenue revenue start $X.XX per growth million in performance. we strong So to year-over-year second ,let's with XX% in to our results. the On share. and revenue growth a reported XX% with

the third at quarter above this revenue this in XX% revenue quarter, total level. or in recurring Our row a was and of is the

bookings. significant and with the on over near amount of revenue new us and it medium-term reliance our year lessens So, provides visibility in

bookings, bit tough comparison quarter's of disappointed would we we million. faced have were $XXX comps a a difficult bookings while of which year-over-year, Speaking with this under results booking any circumstances, presented

and with event some behavior the well and from market inherently seen no in you've moved demand. is heard to regulatory the competitors, here longer forcing And cycle our an of As timing. predict has sales buying to ROI-driven more difficult this as U.S.,

and of difficult layers in the Additionally, approvals timing very of also processes deals international predict. budget make markets, government to

our quarter-to-quarter our should of So, to in continue bookings. see year-to-date quarter we performance revenue in for largely our year. our expectations Combined growth line expect with record very pipeline the we opportunities, in first but bookings, confident are to some remain volatility numbers in with

EIS the centralized is health client an activity IT This a outsourcing deal quarter. some performance Maine. the since IT to during let market, and looked their deal signed completed services with to So, multi-year a client the system for the acquisition. client managed multi-facility Allscripts in optimize highlight and we services. hospital now, we me In first for This full hospital

client example We further. is the practice practice and possible at solutions with protocols of And modules. extend Clark solution, and and Surgical positioned there best XbPrecise are we and incredibly XbPrecise of even extend determine care. XXX-doctor believe inside base. in the Ascension. believe to a and well are our to EHR able provide able be the have of deploy, excited invested aggressively addition medicine be signed to which outside which the this the technology benefits and surface Memorial we deal relationship saw to we of the EHR also Sunrise is a We to physicians We we'll with above to or business marketing part is cross-selling leverage just the precision Anesthesia deliver five-year our we're of scratching our Genesys this Genesys, Hospital the capabilities good a and best

to their like to that I'd to that TouchWorks services. a we revenue an adopted released very the had version XX, of to of the market, we been their positive, June management several PM care Fusion with ambulatory existing enhanced and users' continued and of release a new expectations. delivers along tens subscription also wins practice announce Practice client ambulatory management of number of a Turning feedback Concentra urgent competitor's Client thousands our and Pass, Allscripts automation extremely overall of on PM PM has centers. exceeded highlight. rollout accelerate Allscripts efficiencies. on promise market, sign-ups, that solution over has cycle has Allscripts Grants We're and XXX our of in EHR allowed displaced pleased to achieved our this has Also

June quarter, on and a model payer In results Fusion and future. life see this strong the moved pharma activity, our business, Practice experienced As CRO subscription we continuing and we and trend foreseeable to first reminder, the in we X. for sciences we our the acquired for

business approaches we of this XX% PLS enterprise in now mass believe high-growth sector the revenue, critical of building market. our we As are

to area strong this and Our very strategy off, to some paying results. continue invest see is in we

use cost. trial from address are strategy, the clinical to payer and to needs healthcare development successfully transforming world reduce effectively and point-of-care real sciences management the implementing including to accelerate team ecosystem our and drug data biopharma of Our life evolving direct derived

On represent great members opportunity physicians signed their expand to the network We've the payer of the point to efficiently of which BCBS more a broader a into got deal with significant this them connect Cross for at network. million Blue care. Association we Blue to collectively Shield plans, plan front, X.X two

HealthGrid widely large to existing we engagement what capabilities They right deployed of in very innovative is very a front, is a consumer now. footprint solution the with the an quarter. engagement through On these this population. a exactly needs closed consumer Combining acquisition and very platform we consumer new HealthGrid have way award-winning market the reach patient second are the FollowMyHealth.

the primarily If when is across to patient XX% portals, see low. on overall it's portals. of on you you actually you patient fairly no We and rate and what you're our today, focused patient patient approach that been dig U.S. adoption their on tool. device communicate XX% into look overall population But are at where HealthGrid engagement the and expands you to expands matter this will engagement using with no matter on.

use interactive you're If home, they'll solutions. voice at

selling your cell customer of on as our outside clients We you're via platform with base. communicate cell opportunity and this it as a grow FollowMyHealth meaningful they'll phone. If patients see to our engage phone, your well

acquisition System, front, is client to to selected and company's by called acquisitions strong electronic driven deployment. Maidstone XX market, the customer I Wells southeast experienced move Sunrise last platform of new services continues myUnity. Change the had significantly pleased strengthens a that the England. now international clinical Administration Allscripts' already hospice the quarter, closed Patient This Trust, Healthcare. growth last solution including solutions the of client wins record. we we're service, Overall continued This new new care the Netsmart Also Netsmart uses in which previewed deal of a cloud than expanding and And you a cancer be in major phased a Tunbridge Sunrise live hospitals home runs out announce the and position its at last post-acute clients. specialist the in was and This that suite health its a finally, October go On in existing to following and Allscripts more two as the as Trust roll NHS mentioned quarter, the quarter. on the for new it'll Netsmart

we hospice solutions markets, position the cements as a they adding discussed care long in services. and health time, acquisition this As Netsmart and to that the at provider home have held leading of human behavioral for now leadership

Netsmart, steps position began discussing the we during seizing the parties through ourselves quarter, negotiations value monetizing and to in sale momentum researching investment multiple the of created we've possible Netsmart. took we So, After on detailed shareholders interest. several our further to alternatives, on with for unlock our in

definitive and of work currently to the buyer third continues. a on letter a during quarter. signed Based we on sale have date, We answer documentation diligence accomplished expect to intent the the

you consolidate these the we a obviously to transaction, cease discussions extent conclude to We Netsmart will on in to our update any progress continue financial will we on results.

And so, more becomes guidance timing as update financial close accordingly, we apparent. will our

So, with the over of that, the now call details financial to back turn quarter. through go I'll Dennis more the for to

Dennis M. Olis

Rick. Thanks,

well numbers, As schedules we as the in earnings review reference Relations Allscripts' on workbook as Investor release data the supplemental available this quarter's website. the please the

me purposes, opening let a the make into For diving results. remarks before few clarity

earnings reconciliations unless release. of statement comments First, my focus will stated. available in are income the non-GAAP largely on otherwise and figures GAAP Full the non-GAAP metrics on

Second, retrospective XXX of mid-single of using and recognition impact therefore, to modified quarter approach. did The digit we income effective a revenue revenue January in standard the X adopted materially new second results. and the ASC XXXX, adjustment adoption the our not standard resulted new

As disclosures recognition such, the revenue standard. for Please made applying XX-Q new all our around review to results references the standard. are after current further our new

began we February results EIS, that Third, a year both of closed Fusion contribution quarter Practice consolidating from reminder, which as date. includes closed of in on as the back from QX XX full the a Practice October of this XXXX. transaction and and Fusion

include year OneContent our our X and Lastly, this results QX business business from not of April financial a unit. data the divestiture on closed these did therefore, of

Rick QX the As bookings noted, million in totaled quarter. $XXX

This backlog a included of bookings as record in well impact at of substantial are the As as billion. our that reflects not a a quarter stands $X.X number bookings the renewals in now result, both the metric.

non-GAAP income EIF million the versus in X% of QX of the increase quarter revenue Non-GAAP an in GAAP growth revenue the therefore, million, $XXX quarter a the revenue XXXX And contributed added second second or deferred totaled revenue quarter. statement, of second million. ago. in adjustments non-GAAP second quarter year versus QX million million growing $XX XXXX. revenue XX% $XX to XXXX. million $XX $X million, QX non-GAAP a the XX% Turning of this the of totaled represents year-over-year. adjustment in acquisition-related Netsmart's In XXXX, quarter, totaled $XXX of the $XXX quarter of

million. excludes line EIS portion This As of expectations acquisition-related the revenue $X.X the business. also of adjustment this a in OneContent reminder, includes and EIS with for is deferred the our

non-recurring at and period recurring same Looking XX% our revenue mix came total year grew grew at revenue our revenue a the versus revenue total X% recurring ago. total XX%. Thus, split, in

recognition previous throughout in revenue the incorporate recording, the be some couple volatility measurement XXXX discussed as ASC year. this of the quarters, we XXX changes in in our As will there

high However, we XXXX. expect trend XX% to XX% low in to range the the during

A year-over-year. software line consisting Recurring quarter, support million. portion recurring XX% by non-recurring this $XXX results revenue driven new totals the the now maintenance, and of increased software QX revenue at XX% transaction, the by software revenue year-over-year consolidation item, total subscriptions, In XX% EIS large in decreased Looking year-over-year. revenue increased of of was growth and business.

hosting, million offerings consolidated QX. grew services revenue year-over-year, acquisition. multiyear Netsmart revenue services, services, increase. offerings driven and year-over-year primarily from Allscripts' client service driven by in XX% year-over-year, to XX% non-GAAP to Similar contributed Turning and EIS. such to increased of addition this increased cycle revenue also Recurring as XX% revenue revenue EIS services other managed cycle non-recurring and $XXX by the the service service

gross attributed and to in to margin core basis non-GAAP down year-over-year, was total XXX primarily business Netsmart. our margin, Moving points a gross at acquisitions

we some gross of OneContent gross We expand we will component, anticipate business half XX XX basis our by portfolio. as high-margin the basis year. the seeing the that margin of sequentially down margin period points XX was software EIS gross the synergies offset in we and decreased year. This points Our by services from from margin see margin additional the same the acquisition. still removed year-over-year part client are decreased back sequentially gross last in from Analyzing margin

R&D XX% expenses totaled non-GAAP primarily SG&A a increase excludes year-over-year. from other The a non-GAAP expenses, Netsmart SG&A and expenses. at R&D function was expenses figure increase related $XX up SG&A other the reflecting EIS, and operating Allscripts. R&D at in gross additional transactions Looking the excludes Non-GAAP year-over-year, Practice million, additional transaction the related also attributed expenses. HealthGrid. to and acquired is XX% The of and Non-GAAP acquisitions million Fusion $XXX

our increase. X% million, within adjusted equates in Our EBITDA in software the low-XX% XX%, year-over-year XX% margin. totaled Adjusted EBITDA range to capitalization was $XX be rate in the to This a quarter an XXXX. expectation

expectations total range Allscripts' $XXX efforts percentage Netsmart's million. with As of and will stated range last made acquisition, trending adjusted and XXXX in upward XXXX Rick and EBITDA the EBITDA when guidance the margins our balance is integration the we line October of we throughout to already on track mid-XX% through reported as as $XXX trend the million the between in would expect year. EIS noted, the EBITDA, a extend of we with

the cash a Looking total which compares EIS increase Please to and this below contributor transaction-related XX% the was transaction year $X.XX is results and Fusion the note $XX million, gain this increased Practice required The reflects OneContent line, with million. $XX costs. financing divestiture, EPS quarter of ago. to in the to $XX fees interest the included the less costs largest to other quarter million from other related acquisitions. costs, and GAAP associated severance GAAP that fund and

to $X.XX $XX and excluding income non-cash for net Finally, transaction-related non-GAAP quarter. and and Allscripts totaled attributed the other adjustments expenses, was EPS non-GAAP million total

attributed which reflect and to year-over-year. We grew income debt As portion $XXX non-recourse million, Allscripts net controlled notes, Allscripts with an reported million non-GAAP consolidation secured Healthcare consolidated due total and facility. XX% the convertible EPS partially non-controlling businesses. ended down quarter-over-quarter. quarter The of ownership million payments balance interest slightly million calculated totaled the on repayments. required principal debt, of net owned, to in $XXX a Netsmart's to is Solutions the credit quarter-over-quarter $XXX $XX secured Non-GAAP approximately our but reminder, is decrease Allscripts, long-term of senior to senior purposes, on decrease for reflects in debt

expenditures, totaled after purchased million with free capital cash totaled Turning to software $X ago. a a $XX and negative million operating cash, million year capital cash for software. flow QX compared QX adjusting flow $XX

as to flow was cash related in acquisition in negatively structured quarters. to timing as free certain the are by receivables of the contracts receive substantial business well first one-time EIS related quarter and impacted the payment EIS payment, of Our the fourth the as number

the in cash vary noted past, quarter-to-quarter. will flow we've As from

the as back time this second quarter. of repurchased half cash from into $XX XXXX, collections we year, stock. As contractually EIS to in we fourth expect the improve business In we tend the flow the free move of to increase of million quarter

have of first half shares we collectively the stock purchased average For $XXX of $XX.XX. of an price at million year, the or X.X million

company million As announced previous to in OneContent the approved announced in stock repurchase had $XXX program, million. second today new XXXX. Hyland authorizing noted that to board stock This closed the been $XXX replaces up common the existing a we through Also, quarter, the earlier, in repurchase business which program for our of XXXX. to programs, we sale

As QX. acquisition a we reminder, business this as of part acquired the EIS in

in As a result quarter. of the sale, we realized a gain of $XXX the million

guidance performance Turning maintaining outlook to XXXX reflects as back the well our outlook, the are year. of the first-half as our half we our which for

be non-GAAP we EBITDA billion $X.XX $XXX Specifically, between adjusted and million. revenue $XXX $X.XX expect and of between to billion, million

the reminder, diluted And And I'll Excluding full-year. turn share over $X.XX a we continue adjusted finally, EBITDA it for effective per between tax as Netsmart, expect $X.XX Paul. $XXX that, XX% rate million earnings be million. non-GAAP $XXX to of will and between of to per And and an finally, share. with

Paul M. Black

Thanks, Dennis.

bookings commenting context. and by on providing additional begin me Let

strong growth. We double-digit revenue generate continue to

second are the Our earnings management share XXXX team. in quarter ever highest the been they've under per of this

record stands $X.X Our backlog at billion. a

XXXX. As bookings the our we've of last XX noted being the fluctuate. to in last can want quarterly bookings record of past, quarters, QX I highlight the XX quarterly record in

significant strength confident in of cost our While our rivals and focused provide ROI value has who offering our and and we a includes solutions environment. clients depth this software meet to portfolio conscious and breadth Allscripts durable tremendous expectations, This any service industry. not Allscripts the results and in operate remain quarter's services in bookings the very did offerings. that formidable

adoption reposition our market, sciences, capabilities cross-selling the engagement offerings. We that and strong patient and installed confident of to life our see invest in our base, ourselves share and win in driving opportunities forward. in continue presence we international EIS maintaining EHR in to will momentum we I'm our clients our solutions going R&D, core payer our increasing in growing markets, new on our of We significant platforms. focused our extend As remain

more solutions invest continue believe our offerings effective cloud this drive forward. R&D clients. in growth for enable We help will to going cost for to We

software they and platform share communities API reveals just to collective software a the innovation have vibrant Allscripts community on ripping X,XXX open our functionality for more third-party advantage than the APIs continue already creates crossed Allscripts they have. developers many day. of innovation certified using Open milestone. This clients. are without applications. registered and their want advantage Open and network replacing third-party use achieve the They're what key data Allscripts. X developers X,XXX Developer Allscripts portal. Our entrepreneurs accounts week, This clients and billion Last need how embracing clients API Open Over and every these to competitive Today

acquisitions record company have We value successful a integrating identifying, and and of which growing shareholders. substantial our also track proven drive strategic for our

EHR our enhanced further us investment clients, to our our have assets better in EIS to our core enabled increasing innovation. drive acquisition. have scale with We These serve offering the

Our acquisition the to of the us new forward platform across clients. market. rapidly in HealthGrid this strongly side look the base positions consumer and of We cross-selling growing to

mentioned, to value. post-acute investment on has the look behalf through already in generated our space shareholders. recognizing of significant that Rick As forward We value Netsmart our

strong and sciences continues business Finally our life demonstrate growth. to payer

their service platform's free to a value was seasoned convinced We Practice are leadership to this pay model. the Thousands performance the of doctors they Fusion and extremely demonstrates previously team. pleased what with for a as offering converted of being both subscription

create clients to pharmaceutical allow shareholders. additional analytics from recent OneContent data R&D On significant value our to and of divestiture our investments Overall, acquisitions side, unique driving and offerings value our our the in us we for look clients. forward

to return well future as capital a and to going to for remain We we will balanced Allscripts' capital associates committed profitable invest to growth hard growth our clients confidence. their work, opportunities continue I deploy shareholders allocation and for for as drive want your thank shareholders. as capital to forward. our loyalty, strategy strategy will We the their

the three that We open to questions. performance. With for summary, with reward let's expect all stakeholders line

Operator

Michael question Cherny from Lynch. is with Our first America of Bank Merrill Please proceed.

Allen Lutz

Allen seen This longer. intensified the the Rick, bookings, cycle or On recent quarter in more this this the Lutz mentioned the same model, past markets dynamic ROI the delivery to we've for Hi. sales over is Mike. Has moving of so over you software it is is year?

Richard J. Poulton

think I quarter, close and per it think and but had for the We've cycles. more I on and quarters, with part less more, have was focused in you wouldn't I expected. last I would see it's directionally, more say we trending. acute intensity se of say the more several pushing would predictability that come has things more ROI than

Allen Lutz

the And it. Got What is the ROI on expanding products? that. follow-up ROI are where does highest services see then, IT high? Allscripts the to as relatively its to hospitals there company And a any physicians is and focusing

Richard J. Poulton

benefits tremendous We solutions. have ROI our in

feel we So great about that.

still is something of get you're the good reward usually software convince it, general great client, otherwise they as because we it, manual automating off business when that or us in a return a inefficiencies a but in was on well a it's and – Software some side. our for good inverted had

But high best good a And returns opportunities instance have pretty software also are to clearly those return provide us but they as have So, are. our some they carry high to to to rev don't have where them. margins services clients; for that cycle carry service returns well. very our margins, we

grow very, very continue we're to to So, anxious that.

Allen Lutz

thank Great you.

Richard J. Poulton

Sure.

Operator

George, line with muted. question with see Markets. if RBC next Hill Capital your and you us? is check from Please Please George is proceed. are Our

proceed. which the Okay, Halper Please we'll Steven to next, Cantor move with is out Fitzgerald.

Steven Halper

Yeah. Hi.

potential a are the implications state. that? be of the on questions tax And what proceeds of ultimately, Would then, Netsmart monetization for the plans Just on on the couple there that?

Richard J. Poulton

Yeah.

progressing mean, So, Steve, we're through I conversations.

perspective. But in we but game a between a to that it but cash would tax deal regard, to we a assuming some from that's we tax so, I transaction fairly efficient tax a end that to it's we get up, it mean, got got implications, I And the some transaction, that we think yeah, was have shield first. trigger why bases unutilized, brought obviously have,

interested amounts So, and proceeds efficient debt but end more little repurchase on it's when to as think – – for share fairly come And get well. transaction a game, we're I our proceeds in bringing be we probably would us. levels bit down to an a

So...

Steven Halper

that on would all to that Rick, balance Netsmart presumably, attributed your go And sheet away? debt

Dennis M. Olis

Yes.

Richard J. Poulton

It all goes away.

Our balance would than it does different look today. sheet massively

Steven Halper

Okay. Thank you.

Richard J. Poulton

Thanks, Steve.

Operator

with Muken Our Evercore proceed. next question is from Please Ross ISI.

Ross Muken

the taking for Thanks (XX:XX:XX) question.

little in on get to wanted on delivery side. particularly software bookings a more the the the color Just quarter, bit

of much of any pretty you're the looks strong last a first could last relative the year. what quarter, back versus the line it half second back half And off then you're activity expecting in year? there regarding that level first Is So, for like color the for Thanks. tracking the half to you provide? buying

Paul M. Black

four decent work is size things There's This take, to next, those times, course Paul. to that the of longer through. get say, large transactions or things that or after a we continue we process I'll of continue at number that are that there And go with to over are out quarters. the the

the close it, the year. So, that solutions the both there's of fair Allscripts would space, fair of versus just into that the number pipeline But, opportunity as as out EIS space. sits sizable of pleased the also Allscripts with rest that cross-sell there. transactions number to expect a EIS four next, I'm I'll over of quarters of call course a we the well There's solutions into opportunities

also The I'll the there as with Motion EIS our ambulatory the of component been organizations And seeing in. conversely, marketplace So, some that strength are as from has parenthetically lastly, we're we're at a if solutions departmental solutions to And that we quite life when have of have but a the specific large example, that in do that what interested acquisition you which us sciences the in are new an for robust. Sunrise be interested say, lot the what would for that performance and strength amount staring largest, payer with of don't continues fair very clients there's just client did probably Sunrise guidance. just Allscripts as traditional the pipeline are multi-hospital that today, like, Sunrise Care that. look additional we is that the if looks at while. the business to existing of I movements, creates been to on you well continue an Those suite working that will, footprint, a is opportunities will, that close, Sunrise reaffirm in we've opportunities aren't some encouragement

Ross Muken

Appreciate the it. Got color.

Paul M. Black

You bet.

Operator

Our next question is from Richard Close with Canaccord Genuity. Please proceed.

Richard Collamer Close

You activity the and XX% life hit think enterprise. you said on (XX:XX:XX) sciences you the and there, said I

And selling of So, was is big if a little that down then, a business revenue? for some you you could what well? be products, exactly you XX% are how elaborate that those guys of going forward? be to And going what I overall drill wondering can seems of there, area then, into guys just

Paul M. Black

Richard, So, the enterprise meant – yeah, wide. so XX%, company

to offer fundamentally answer question. that following I value are So, bringing? proposition mean, clients. we we that's What the the these to

that helpful the For some science some of number CROs, that using we've they clinical to longitudinal a uses and time a captured them to do dataset There's dataset follow-on clinical that period in we or follow-on they quite have life testing is of information. data for companies long their doing that have of are trials to that do. of or over whole

recruit help that trials also more We patients can they're for them efficiently running.

doing, lot the a obviously and in money. saves payers them pharma then, a today set. of care a payer the the CRO So, And as those we point clinical you're inefficiencies of of the have to primary on lot what lot help trying of think connect it the that's to eliminate for can side, which of inefficiencies –

to, different core that several but actually in bring up products value shows proposition the that productize that So, we them. that's to we

Richard Collamer Close

So, is that to side ambulatory up provider follow that of the the any now? is experiencing hospital that, as a experiencing side and area delays

Paul M. Black

I than and situation of them financial think time is providers allows market end those customers decisions periods. to make shorter the in different

Richard Collamer Close

Great. Thank you.

Operator

is Please question next Anne JPMorgan. proceed. with from Our Samuel

Anne E. Samuel

heightened maybe speak to environment, I of spoken you could question. competitive competitors taking some Great. a hoping my bit Thanks to for your little was have the competition.

seeing you in Just anything wondering, are different marketplace? the or new

Paul M. Black

necessarily or the and we, cycle electronic think, health would you been industry systems in I above about consider opportunities what create anything I market be the new markets have the of higher revenue case wouldn't the how before for the for not now. intensity. U.S. levels above I right a say the to and is mean, market in market EHR international anybody of the records here in – different. not all mature That's certainly markets I certainly some think talking competitive the mature and case

I market access of PM have electronic for you're just So, who that's in competitive of lessens the it to of us those markets, a those health pretty and but some business right now. think that, systems, yeah, if records

Anne E. Samuel

growth? do is necessary to Okay, of industry you spoke great. Thanks. Washington. What And then, you about a catalyze lack regulatory events of out think

Paul M. Black

dictate may of saying a requirements bit right at environment point. little continue now, some a we're It's to Washington new the in Well, just lull.

the I growth the themselves. their So, world. you have come believe it reduce thinking we do costs, out lower our they a is think mean, tend services provider – our offer either day, base help walk to them look, should catalyzed to But, the of I is to think and we be help that efficient away what regulatory for for them can costs software will way nothing of in or become don't tools the to else more our I – end well

through our actually stronger. of make them said, gets proposition there and more and as decisions so, to pressures, and think longer more alternatives to their providers sometimes. with stronger think takes we kind struggle financial But that And value continue and longer

Anne E. Samuel

Great. Thanks very much.

Paul M. Black

Sure.

Operator

Please proceed. Percher from with Research. Nephron question Eric next Our is

Dolph Warburton

you Hi. taking This is for Dolph on our for Eric. Thank questions.

the think strong from we're I we think you're – last QX, for years. lapping software As to I revenues looking some look

And view organic should see QX? bottomed you. out? business into so, Like do in perspective, we two, continue has attrition growth And you a the from two EIS total growth how one, Thank the questions. going to that the

Dennis M. Olis

I'll Dennis, is This that. Yeah. take

is do on help basis, don't we guidance provide some again, So but provide in a clarity quarterly can I QX. specific what

you to we've revenue the that already piece provided which revenues some is growth would organic EIS get The Practice help only Fusion back year. to into the and an major the We've other acquired for growth you revenue need information right. mid-teens we've the second quarter the to of is you number, So, the given number, you the in the quarter. an Practice Netsmart you revenue organic Fusion in number given

the the of acquisitions. So, growth be components, those versus would our organic you absent quarter the if same X% for approximately impact adjust period in ago, year a

quarter, I over the I representative we be $XX how look think this type of We million you the it's said of that the the could think look second that second that year of of, QX. guidance spoke full we the quarter same again at at as to in will relative the and the number revenue, do math provided. the what quarter for EIS think that's we the get that we I think last again, I So expect of would When year, half consistent the to the I year. half

Dolph Warburton

Great. Thank you.

Operator

Stephanie Demko with Please Our next question proceed. Citi. is from

Stephanie J. Demko

my questions. guys. Hey, Thank you for taking

Paul M. Black

you. Thank

Stephanie J. Demko

your sized kind is was the for noticed first a noticeably interest of uses we is, an in large not of of mark the missing. cash the a this one in of Netsmart, a or cash about acquisition? I buying Does bit shift you So, M&A just asked when strategy that uses

Dennis M. Olis

has I never mean, look, been strategy. I No. our mean M&A

targets find us that's get from we giving we what by leverage our scale either when – footprint, greater help we is that strategy jumped or on. we've usually achieve synergies distribution think Our can

strategy. of build the it's some last to a with will core driven continue That but nothing of that's of vibrant we'll said, our the to M&A indicative regard long-term. part franchise for – so, us continue as activity you've not looking the over the And seen months, change six a to

So, completed, if we like, we sheet balance This to do. do power see done if to a clearly, have want something buy we this, plenty we'll and we'll it get transaction we'll of like the it. reload we what – and

Stephanie J. Demko

meaningful rate. pretty a a X% pick top-line on are All to just that – out? to forward kind question is growth the recent level up growth any healthy hear right. your on assume And follow-up before, the Good it to the call then, you Is to that organic is organic in organic there from hear. Good of that one-timers of or a safe is quarter had growth that.

Dennis M. Olis

We're a X%. in We Yeah. QX. good with that's number the think pleased

to going of over of going above this as we're and At guidance. there's in additional terms opportunities providing any terms In guidance our provided we annual number. Paul mentioned, obviously forward, grow point, we're that what not

Stephanie J. Demko

questions. Understood. All my you Thank right. taking

Dennis M. Olis

Stephanie. Thanks,

Paul M. Black

Thanks, Stephanie.

Operator

Goldwasser Morgan proceed. Our Stanley. next is question from Ricky Please with

Mark Rosenblum

on Ricky. This general market just environment. guys. on the had I Hey, question Mark a is just for

about booking So, bit over the a a in be this of you've little softness to point where next we seen a slowdown two? or Should as a normal laps year is demand. think kind of going or there the new

Paul M. Black

said. be we've what just predictable demand, an little sales What let's it's as we've cycles less clear said And it's and Well, on a is, not regulatory. a ROI driven timing. result,

on giving guidance And So, never we're we've that's bookings. been what into saying.

offering, take changing good now, be. that pipeline we're it start feel away a less won't think what our it's that our little And so, but demand about should but feel and we which used you is, about is to a good environment we solutions than we predictable I

Mark Rosenblum

Got you.

any specific color? And on hospital helpful. the Is there on side, is just That's ambulatory more it more side, the pockets? any Okay.

Paul M. Black

least this be cycles sales because I'd say at – there. point longer is in side hospital predictable tend the terms probably to the

Mark Rosenblum

Okay. Thanks, appreciate guys. I it.

Operator

is question Company. from Rhyee Please next and proceed. with Our Charles Cowen

Charles Rhyee

recall you of maybe explain of can is lot that more bit of you hospitals a to. more volume the little question. several quarters, not Hey. to area shareholders Netsmart for of just a Can monetize if like care the that moving a just where I to four on of the is something and here, understand taking maybe value alternate unlock and you're up growth. about Netsmart, of Yeah. but Obviously, not sort is space here the for seems you talk follow the I seems behind there was it? to great thought Thanks. want saying Thanks been a care wanted thinking walls going process post-acute over to outside be has correctly, of the sites of sort last lot about the you, rest the acquiring about it attractive I –

Paul M. Black

all was the space, Charles, to we intuition. was we that you the and years sit it back entered created into happy at of et beliefs tremendous cetera. with beginning, today, And two-plus a that going structure we're we've stated off to faster, good it have ownership how that grow the of later, watch value

that meant not or to were long for of buyer of the we sustainable set rest term. going either was So, we It that. ownership feel be the ultimately a From up we a seller it. beginning, good about the structure a

telling shareholders familiar you're don't stock they at now And trading assets clearly our what's is. of lot numbers. happening us high the of are our in a on that so, value right today, very put where pretty with based post-acute probably And some our today on ownership what which is are at

shareholders financial shareholders the who to reward It's right and own And will us think in interest us for for the a let of of that. so, thing we of really than more somebody more this with it's I think asset do. asset values it our best our to it's been a and strategic the benefits

Charles Rhyee

right. helpful. That's All

still then M&A then just the here balance sort your now the capital going sheet of How and about follow-up more strategy move of earlier clear deployed does think strategy you'll have to – sheet adjacencies we forward, sort care further question, going sort where else balance clear sense question is off the about going it So, forward into going? up think make to we someone and when is should have about here of Thanks. then forward? the that and

Paul M. Black

leverage sense the it for continues assets value. to make strategic we to Look, have

network our assets, more well we'll will our our leverage some solutions, more different I'm our distribution in to for so, brand ways footprint, there and continue And them as take we sure and our value. And be in that's broader that but not what's a what use to augment today not and in about triggering of strategy again our we'll itself, something you future, we're that's And Netsmart. telling the that's behavior acquisition strategy.

to we're full suite just as to forward, be being beyond incumbent how So, you the We we'll opportunities provider. EHR all it's keep on we healthcare the an position industry us going a (XX:XX:XX) go to go find to to company. of in company talking want but

Charles Rhyee

lot. Great. Thanks I a appreciate comments. the

Paul M. Black

Thank All right. you.

Operator

SunTrust. with Our next question is Please Sandy proceed. from Draper

Sandy Y. Draper

very Thanks much.

that opportunity little what's some on – of that being level. a your of with missed new within want sort quite at Sunrise I Thanks. I out jumping of and wanted existing comments. of to potential some now, about and sort I customers maybe understand higher of to Just footprint? was is driving what that to some the was activity follow-up late wasn't clear Sunrise Paul, bit just that sounded really or flesh the a a interesting. expand little that it bit I around

Paul M. Black

feels just we're feel and a state of actually an there that is It's work you probably on, you clients so comfortable. that the looking baked the the – nice base, to in was what And fair we planning standpoint, year had meetings guidance highest of we through interested we which are a just negotiation Sandy. it's the it's when makes past, into drives amount have, in when a from the from necessarily the that but that a you that do that Yeah. we've doing it's number, a in the not that Sunrise, forecast, new services, means folks. think large is are from larger about keys tracking some means of comfortable. advanced clients, it's we with new EIS outsourcing. fair seeing business, but clients and we've going our projections management of that, that of with that of them, be bought even Sunrise, what know for when of or additional been not Thanks, nice any a business been bit Xx that looking moving playbook will number Again, the that what – that, managed also number which from at a benefit you Sunrise, not the so one a uptick folks they full we executive to contract be them. been is cases There's In were we've that would And overall and typically where it some those new both. we at of component pretty to it while, we're just of expect it of to little a the where those logos, some it's some through that us are going these acquisition to are forecast hosting, in today

also you size, will be if pretty engagements. decent those deals, those So will, in are and long-term

Sandy Y. Draper

that. it. Paul. Thanks, Got Appreciate

Paul M. Black

for Thanks Yeah. the question, Anne.

Operator

from next Markets. is Hill Please with Capital RBC George Our question proceed.

George Hill

are issue, guy re-platforming, guess are do attractive process, feel those have – created a or expected? sales you I they you kind I your than a appreciate some talk instability one sale of opportunities, of like you in question. the that's a guess, had you taking about guy Paul the providing having are couple I guys. having Rick, the Hey, can a the those competitors, client got, of regulatory and at you been stickier opportunity by some competitor proving

Paul M. Black

knocking I us you're yes, of referring of turf competitors. of both, chaos I one client I of companies about new to at George. And think but don't got we our because PM the mean, out you've prepared go opportunities. of you're hear it's indicative all at Little remarks, of providing there on to if bit that's talked know degrees several is after, to. is going what right, some good our a differing

too. switch little your of IT like opportunity. it day create a think, I it's I not at spot to bit just the but out a it So, work solutions, so does an mean, takes

George Hill

you know you if what bouncing are And around Okay. was the bit there? – the up talk can client guys came don't a little call. maybe I earlier within that guess on seeing also and I like, stability then, I Allscripts, churn about

Paul M. Black

performing Adding Yeah. to go just by people them that the some on appetite got is make a to somebody by for the you're switch for well acquired cases else. in they or Rick typically said, fact not driven what

made Pro, we've the good. would investment Sunrise, that bit pleased leave. them records, The reasons with why a that. in of we're lot the a if to with why on spend of it's you reasons to Allscripts. they a and topic, TouchWorks We show some R&D around electronic multi-year should will, George still So, medical whether or money roadmap our people mote is overall, created future And hygiene stay it's historically pretty continue on

the up them So, Netsmart the to reasons lots with will of actually cleanup us. and regard this momentum believe little interestingly sheet thing frankly, create bit on a of We of we're quite giving balance in lots think the continue to to that's actually concern mark because credit us or when people question the represented. debt everything been business what give not non-recourse unfortunately of a a roll from of new that side, the just nature and on overall at times somewhat

much combined in, all in prior this get going lot you of other what's your a don't with with market. mature instability. times, guys, So, question, on the A

would drive up it's new out their having that take So, with our guides full we're of logos. proper advantage to people that and to sure make that conversations

George Hill

Okay. I appreciate the color. Thanks.

Paul M. Black

the for Thanks call.

Operator

Genuity. from Richard is question Please Canaccord proceed. Our with next line Close's

Richard Collamer Close

the thanks follow-up. Great, for

total what in Just life be back and area that And market the payers? life guess, can has you the I in think XXXX? that beat addressable on to sciences sciences, grown from, the do maybe XX%, having what

Paul M. Black

what So, Richard, probably we it what fourfold it's tenure not going say the say, but when year over got running year, just to here. doing it's let's in I'm our as was company,

So, Fusion Practice nicely. has of Certainly, that. up some addition of it's the gone accelerated

their didn't it's acquisition. the is, and the numbers year-over-year answer of question payers significant are be and growth, The give overall, would but to answer part I that grown your huge, they if organically with in second the ton and science to life So nicely markets care communicate providers trials these to very with and payers. connect their trial in do the to trying a the of effectively of companies and are that work case and spend point trying networks money, of CROs follow-up

markets. So, very these are large

Richard Collamer Close

Thanks.

Operator

question-and-answer remarks. reached back the have our we session. like to I'd end gentlemen, Stephen closing of and the turn call for over to Ladies

Stephen Shulstein

Thank you.

As to international ownership growth and our made These adjusted related statements of EPS, well to but to this non-GAAP we've of aren't the limited non-GAAP a statements related EBITDA, and outside reminder, of statements our businesses in footprint, include, as during forward-looking a and outlook ability number revenue, timing call. acquired sale timing core as enter our of expected the to anticipated us joint of joining recently Netsmart evening. the by and Thanks transaction use into venture complete related and our a have proceeds in the to everyone great our and including the integration the for and of businesses transaction. the

Operator

conference. today's This concludes

may you disconnect time your thank this participation. at and You lines for your

Veradigm (MDRX) 2 Aug 182018 Q2 Earnings call transcript