MDRX - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to Allscripts' Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to turn the conference over to your host Stephen Shulstein, Vice President, Investor Relations. you. Thank

begin. may You

Stephen Shulstein

much. XXXX and earnings very Allscripts' to third quarter conference Good you welcome afternoon, the Thank call.

Chief and Our Allscripts' speakers Olis, President; Chief Black, our Dennis Executive Officer; today Rick Poulton, are Financial Officer. Paul our

We can be to a the and no during statements and number undertake call. statements of the forward-looking current vary on that the presentation are of risks events. a based new revise of cause part expectations to We'll results these making light These in statements materially. information our number actual Q&A future and or obligation uncertainties involve forward-looking of

and Please our well as financial non-GAAP to that on for risk that statements tables SEC filings the factors Relations release available earnings both in workbook more our GAAP detailed may supplemental affect refer Investor Please and website. non-GAAP release of are results. the the earnings as description our our and the reference

that, call And with hand Rick Poulton. the to over I'm going to

Rick Poulton

Okay. afternoon, everybody. joining for Thanks, Stephen. today. Good our call Thanks

shorter on both we mind, more allow we in interest In Allscripts. questions always, and prepared your have your to As for our remarks keep are traditionally on order the we'll these that your calls. time time than appreciate

and a comfortable third summarize year's our outpatient you XXXX during let basis. quarter strong of into third our The quarter of will for last remain and pipeline $XXX We we are So with across year-to-date remain briefly which our heading last our broad-based reported important, with we me increased up inpatient, bookings quarter, XX% fourth recall sales new and Veradigm and guidance as Equally up million. franchises. performance. balanced quarter. bookings operational a the deals on we XX% from strong momentum This was also was

and their both a we expansions strength take bases. Allscripts. In in largest the made clients are perhaps well. progress we biggest quarter clients these the of of electing to commitment Both indicators at significant had We good leading upgrades saw scope But as had we is of and with across market, a our the we quarter Northwell. customer client strong the Sunrise several to the saw core solid news very and inpatient number Paragon

extension Northwell As to we've long-term previewed extension our last on of call well talking of with new This them which negotiating that we to by of existing finalized quarter, the securing at report the agreement extension them platform some of the we them completed have we services this is signed to be and of business managed relationship our XXXX. extensions with exciting that, significant this the been follows I'm our them, through into we should as happy expanding that contract with of end TouchWorks this renewal and area. piece about are last year. an last the business our as the year Sunrise close

our that the to next project addition, the technology with co-develop this clinical and this progresses and joint We'll commercialize operational we entered We agreement you next-generation using plan a expertise, announced updated as into Northwell's we develop Northwell EHR development over In several with development keep combined EHR. to quarters. excellence. and

great to clients. quarter as new new the market, had we ambulatory a we share XX Moving signed winning market some

allow of adopting join going combine footprint continue of which there our ambulatory This vendors. Centers of of and Colorado, their larger our suite for forward. technology will of physician An new look us this value groups full in groups and a of seeing Orthopedic to Colorado, Orthopedic expect our number displaced competitors, we to additional organization. to to and Centers number groups expand example is providers consolidate of opportunities of which saw a combined are We as physicians independent

in this feels new very our for market, to strong engagement patient services me. ahead tools tools, revenue cycle Looking clinical and pipeline

balanced using with the I to Veradigm, simultaneously happy we support third of approach with long-term latter An announced while with are during very Health in example to the long-term both near-term remain the growth. strategic investing is Finally, Komodo that areas the partnership growth achieve targets, quarter. we our

to partnership world's on public complete this longitudinal for health linked the Initially, will view EHR dataset private largest and than enable encounter million containing linking nearly map. patients. Allscripts' with payers. data ambulatory collaboration industry-leading set will care identified more And contain XXX focus Komodo's provide Veradigm the data of XX a The will

will data We and believe for The claims are and partnership clearly interest in clients even as EHR analyses this linked from well is our as to clients clinical and in gaps. this research Veradigm our competitors differentiates economic we our this. and demanding further enable data significant from seeing market EHR fill both perform

quarter turn call me more for let year. third that, go over to of the and the of balance for outlook with our details So the the Dennis the financial to through

Dennis Olis

Great. Thanks, Rick.

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

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

on acquisitions figures earnings on any all of have results second, exceeded as otherwise the And First divestitures. impact my metrics will non-GAAP income the one-year available transactions include third largely and comments and we unless recent do stated. the are Full on of quarter non-GAAP year-over-year reconciliations the of our statement GAAP release. focus not in mark

the the results for Now, turn let's third quarter. to

strong totaling up in As half Rick XX% million, were bookings year-over-year $XXX from momentum the as the continued. noted, first quarter the

Year-to-date represents seen not This billion. we the stands renewals impact metric. bookings a $XXX of as the million as are now backlog of bookings entire included reported the portfolio. Our also quarter increase our year-over-year in $X.X in strength bookings as well that across reflects XX% both at have

Turning statement. to the income

$XXX Third quarter our million and totaled X% range year-over-year. guidance within up non-GAAP revenue

by seen half is and have multi-year expect improve in the XXXX. bookings continuation fourth year saw mentioned communicated the growth ago. we with quarter the quarter we revenue X% entered year-over-year expect the and organic this the same last the the We of the period as year-over-year in back year. to trend As guidance of earlier This the on XXXX improve our to versus we approximately a we strong in growth we that we reflects call, consistent revenue third

Non-GAAP million, revenue quarter XXXX $X less was reflected QX of than $X the XXXX. totaled third the third acquisition-related of X% quarter adjustments in million revenue revenue million. year-over-year. in GAAP $XXX up adjustments In XXXX, such deferred

recurring the higher software amount same license XXXX, in sales, QX XX%. at upfront up total from versus our at revenue sequentially. X% revenue we mix benefited our split, of thus recurring a revenue Non-recurring versus was Looking was revenue total and last year total flat period came as

the expect to low in range balance continue the of XXXX. XXs XX% high trend to We to for the recurring revenue

our infrastructure below result Veradigm in expected XXXX gross the non-GAAP with business slightly Total than of third in compared our quarter as quarter higher transition gross the the XX.X% hosting of out XXXX XX.X% in to Moving came second margin in Allscripts expectations business. was of the margin. a of and of data margins cost quarter XXXX. in in in the the quarter investments in XX.X% building additional third and the Gross

margins gross to expect improve in We fourth the sequentially quarter.

expense year million synergies transaction-related $XX as from drive expenses. totaled management. expenses. we SG&A transaction-related operating excludes decline $X a to and Non-GAAP SG&A well a million, at The overall as figure as actions benefited ago, Looking non-GAAP other taken from

up R&D expenses. also Non-GAAP Recall excludes that was $XX transaction-related non-GAAP other year-over-year. slightly million, and R&D

margin EBITDA SG&A $XX Our margins functionality gross software I impacted decline was capitalization the totaled across we portfolio. line. EBITDA our slightly EBITDA rate as gross invest million, leverage in partially as Adjusted offset to the up adjusted equates new discussed XX%, was earlier, XX% the continue by in Adjusted by to on margin. which

growth the business to cost improve in SG&A leverage overall savings in to we to fourth margins R&D revenue related as data upgrades, from services center the expect high-margin Veradigm planned expenses. on due migration, quarter and and We our additional benefit faster

and below of $X share ago. Looking from costs the which line. a loss million. Total includes million transaction legal decreased million, $X.XX GAAP other to the year was to interest $XX compares quarter per and in cash $X

non-cash the a quarter. for and debt secured adjustments income expenses million totaled non-GAAP and convertible with $XX to $XXX $XXX million other principal excluding ended in balance of Finally, the and net non-GAAP senior notes. Allscripts $X.XX of was million and We quarter transaction-related attributed EPS

EBITDA Our borrowings quarter. of end leverage XX X.X repurchase program. at ratio has up our balance of months' end defined in strength continued $XX XXXX. share the The return was Allscripts in in the the flexibility the under gives totaled to trailing the slightly of $XXX capital repurchases Share sheet for remaining high-growth investments the shareholders. quarter, million as of primarily areas net divided debt currently due additional stock related repurchased to at by of existing and X.X its QX from million to quarter XXXX us third significant

share We repurchases forward prior with expect practice. to going additional be opportunistic with our

from to XXXX software operating Turning totaled sequentially $X flat $XX capital outstanding benefited revenue XX for during cash down the $XX totaled million, from sales million totaled improved year Days cash. XX cash third QX capitalized a we accounting ago. quarter expenditures. collections. after higher third DSO million with of in and quarter as and QX free and flow or compared the days flow

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

levels as have related flow XXXX. decreased from costs year We XXXX cash throughout transactions full expect XXXX to improve onetime to cash

Turning to outlook. our

between of billion and continued outlook billion and $X.X midpoint. XX% at and reflects both our XXXX This We expect with businesses. provider the prior $X.XX an bookings our in increase year-over-year in consistent reflecting, Veradigm strength

from bookings that to accelerate benefit so We revenue XXXX. growth the expect strong in fourth as we've the quarter, we seen in far

revenue approximate As of fourth the also between growth year-over-year $XXX fourth affirming the which $XXX quarter the a of outlook. result million prior reflects and million midpoint non-GAAP are at an for our quarter we X.X% guidance

raising between we fourth This non-GAAP by share to our full $X.XX low share and outlook GAAP per Finally rate XXXX outlook the $X.XX end outlook for narrowing quarter. for fourth We XX% non-GAAP on now our to-date XXXX. expect earnings the the performance effective are quarter. for per and tax for earnings a year based per reflects implying share for of $X.XX $X.XX

And it I'll with that, Paul. to turn over

Paul Black

Thanks, Dennis.

long. I'm help We've quarter. anticipated performance all mid organic the for growth third fourth results in year-to-date. the pleased drive with First This quarter strong had year will and revenue the single-digit bookings

our meet clients. as our Consistent to commitments years, to team a work with to and we shareholders prior

Our leadership obligations. meet in or experienced our and is publicly the to traded team, our using of its market experience knowledge exceed most companies the

driven this and performance have long-term and Our vision confident we're investments for the in continue strategic term. long XXXX will

Allscripts where interoperable solutions offering the to that clients. the consumers. organizations on care future, is Our To today's focusing our in of and we healthcare marketplace connect needs is and are health engage also current strategy the while end place going this optimize

and Veradigm bolstered are most expanded our responding. platforms medicine crucial EHRs in and payer and with strategy other and Through the our solutions our are health address today. us extending by care and We pharma capital this relevance, we've have needs from made combined first-hand human results expertise, in clinical we our driving clinical The offerings. position investments precision clients our to

also markets. digital life We're strategies demand the and increasing the is of on global payer serving Allscripts by rapidly solutions. for embraced all delivering sciences growing these

clients are by this in embraced the by our Northwell market. Sunrise as are and in solutions our We of see largest long-term best client platform recognized Health. extension Our

as in the best-in-class, EHR by Black solutions industry global XX number by Book user one also in named of recognized Our satisfaction providers the survey. solution are the

large top a hospitals Black XXXX. also as Book Sunrise overall across for the in inpatient United Allscripts EHR States named

Company to In business Allscripts' the unit. awarded addition, revenue Sullivan Cycle Ambulatory of & cycle Revenue the Frost Year

Experience attendance. month, cycle of Last we clients XXX revenue Over with Sunrise, Dallas. Client our in the ACE Topics or upgrade door in Meeting our held through precision TouchWorks, included front digital Allscripts creation all-in going Paragon medicine. were and in latest

we revenue deployment investments, the will M&A flow. R&D and will leverage our us and priorities year and organic increasing share as This opportunistic accretive we long-term prudent growth, generating Looking of this ahead margins at XXXX, to cash of capital allow free opportunities in buybacks. our scale on end strategic on focus execute

serve better benefit to shareholders. us clients associates and allow will will our this of All and

up With for summary, it questions. open let's that

Operator

proceed time, At this question. you. Please conducting America. [Operator session. your a Cherny first with Bank question comes Thank from Instructions] we’ll be question-and-answer Michael Our with of

Michael Cherny

Good evening thanks the question. for taking and

product -- milestones your talk of you was ties think developments first this this And to at in be about you the you and with should to work the development. So, work multiyear year? we through product about these it how the Northwell in maybe rolls economics as least the and even those better how targets? the us new of looking terms out actually some growth it are maybe targets And on Can efforts? model should for it you what earlier put how contemplated commercialization we expansion as on

Rich Poulton

Mike. Hi, the for Yes. Thanks question.

the question will every I maybe a quarter, or your of building. say part we'll really you think and expect hard focus but of not work to workflows next more the I'd We've on get done think work on toward first worked really bit respect with do the interface a a work months of continue solution user this that's the to with over time-wise, on on should then And design I lot so. six chassis and already. little

a build. for of bit to us do so little lab for Northwell And will work And we'll to have you of will a if then be course commercializing.

it. of they'll a So user become

big-picture the that's So plan.

that. what's we'll that, through through work we go relevant as we As communicate

of -- today. is user that EHR on question low satisfaction every think it though in starts the really and with market the to very understanding I rest your again there

And modern opening that so users. we for see a to build technology solution a by really a opportunity big uses the

about So kind tool a we're for physicians we're it. excited is it. the by thinking way physicians built about And of

talked into it's our we've that yes incorporated -- aspirations about. We growth already

we'll, see appropriate. As we get as we kind it it share outlooks shift commercialize and what, revise of, further those with we obviously,

Michael Cherny

one Thanks. And Dennis. quick for one then just

any margin or drive You the on you in that XQ of reported? -- fourth better is How there elements Maybe that the gross that? margins tied compares in talked are other growth? much Or how about that there to into details expectations components step-up revenue the the mix for terms other gross simply to quarter.

Dennis Olis

growth Michael. We QX is to to top we the improve noted it to in Yeah, as sequentially significant QX expect margin expect do Part from revenue that revenue. pretty in fourth see the quarter. gross of line the overall just growth

has which software, margins. being that of Some high

our products We growth within different across pretty also platform. strong Veradigm seeing are all the

provider business we what see So And in we expect space. that to that typically margins the grow. than has higher

that And expect then the we had -- costs consolidations, see center incurred the is, in we to which complete the to last item quarter. incremental data third some

the by we into conversion margins bring year, should and the We to expect the of of into data completed center higher XXXX. the go which be as end end final QX

Michael Cherny

much. Perfect. Thanks so

Operator

Our your next Charles question comes with Cowen with & Company. Please from question. Ryhee proceed

Charles Rhyee

thanks Yes, for taking the questions.

number of you a if the or I question. bit it Veradigm's missed maybe there in can give revenue performance to kind share us growth for a Is you I of characteristics a going of know but in if quarter. Veradigm? kind Just don't terms sense little with the of specific a at least more

Dennis And quarter. of X.X% then secondly, growth revenue talked and sort the midpoint of fourth X%, about Rick in you

-- set you're of the for the low sort bookings talk of the This Thanks. Anything course quarter strong quarter? seeing the obviously you're came had seeing those quarter? at -- already year what kind in before. of out guidance and of happened on end might that quarter range throughout that you're the coming we Anything lower this -- end kind of implemented little the of sort between the can you about just you of maybe fourth a what Or for that bit seeing next kind already far. so have that in bookings

Rick Poulton

Yes.

that's today I a as should mean Charles, tomorrow annual et Veradigm cetera. year million to -- is with segment a $XXX of in business file Q you million So, think $XXX our But disclosures range. we'll the

to are We ahead days it. its believe continue still of best

the growth and near-term I also what that opportunities hitting earlier -- happy think progress for our the are made longer see numbers, but I'm So, comments business. term making I'll reiterate about investments to I us on

lots think that we'll about future have the remain about talk to go. it excited we we as in and I So,

fourth revenue revenue As -- far uptick. bit and tend strong to little quarter. have as seasonality the There's they sequential Veradigm experiences a of that a

So, a several the that it's quarters sales that surmised. of beyond for a We've that I in and bit you starting see what factor. come fruition line. think have strong we're little revenue really now to to But some had in row you

Charles Rhyee

in we to it early and little took get implemented year, bit saw ramping while to clarify the a little it's it to numbers bookings strong more So, just that the start themselves? the of for just a into just

Rick Poulton

deals the is at there implications in. those that are Again we of and in there's some coming some then also mean some that sales some of that. are front I that pipeline to Veradigm other seasonality patterns Yes, quarter the of There's for are outlook convert previous have will our what of sales us. in that and revenue fourth

at also in in which get little all takes half to a it's into first the revenue HealthGrid cycle So, strong while convert bookings some up had and and mix that above. We've management a the of little revenue.

to benefit that into So, the as we're see we of starting QX. go

Charles Rhyee

Okay. Thanks.

Operator

proceed next Robert your Please Sachs. comes question. Goldman with Jones Our from question with

Jack Rogoff

Bob. for taking is question. Rogoff my Jack Great. Thanks This for on

So, it to income was XXXX. in get encouraging into I your commentary of XX% net But cash quarter. flow headed free to plus been positive see for territory has think the

my is that expectations goal? your step-up closer So, of capitalized that And the range gets given what in within in software question the you to incrementally still is quarter?

Rick Poulton

Jack. Thanks Yes.

So, year-over-year flow it if for $XX million as third quarter. free year-over-year, we you our million at second sequentially presented was quarter up from the from cash a $XX basis, results look

year-over-year our and and cash we've sequentially. improvements operating flow our free in So, seen flow cash both

that some incurred Going and that of -- year. We'll We've continue the XX DSO to be drive will the also from down an performance. will we've like during going data for better that improvements continue receivables work our be we at complete on the seen XXXX in action last been the forward, us significant XX. to end we'll focus -- to behind said, I part, has which most will moves the center expense

in the all we've are behind now. Some of us had retention our past programs that

that a be to carry forward the into to future. continue we across will both spend And SG&A more company we've also revenue-generating look burn to benefits where those makes seen won't shift reduce overall the our we dollars our look as projects. benefits the year. those throughout some to manage sense and where that So overall see expect We'll it gross year, R&D into next of in

Jack Rogoff

joint Northwell, spending involve And in we any regarding what versus normally expect? would that's development your helpful. it, increases R&D does Got then efforts

Rick Poulton

that. I point, this not would expect At

Jack Rogoff

Thanks. Great.

Operator

Our next with proceed with question comes question. from Windley Please David Jefferies. your

David Windley

business focusing you on do Veradigm -- thanks. data provision they to with Or and and of the payers the EMR data science, kind Hi the to that lump will? of customer into granular-specific of productizing it data data kind for Veradigm, sum life are in more is the as In and provision products? it NextGen particularly, from yourselves a

Rick Poulton

need. There have updated restrictions of -- refreshed a will by whenever feed basis we and client the on use or And that's kind it. vary feed a are or regular it's that getting one-time information whether of some

So, it. you that as should pool is I a can wander a it of think think more just product people it than around

David Windley

Okay. the that business in the science as that the I traction -- well. fourth of Or days? balanced kind pretty And is between Is mentioned the and this life to more seasonality you're traction sciences you quarter, applies think payer? these seeing life

Rick Poulton

is Veradigm just mean Yes, more -- has-- so, a data again, I business. Veradigm than

David Windley

Sure. Understood.

Rick Poulton

Okay.

companies to life much like surrogates it And CROs. as science company science very and well life so appeals as payers

fair all in say areas. interest and enthusiasm And those that I those and is so it's across of growing clients' all think the areas. And seeing activity to major we breadth we're have depths

David Windley

Okay. maybe, that but certainly data. the go, NextGen of breadth and with your finally then let augments I'll deal And this

some data or sources as discussions on in you maybe, volume to set? discussions, the progress least about, talked Could those those other the you've in think the data. comment being of either it I relates growing with discussions at of

Rick Poulton

we NextGen that's we're Well, up part a everybody later with scale progressing seeing year. by off that and now. of I'll the But come that expect to much of just good start largely get as in into revenue more from would next to expected. I second quarter significantly, We're saying, as start some

finalized the continuing to dialogue created we've industry who partner are that we front scale Yes, competitors, EHR and with on other see us opportunity yet. have the there. to Nothing with see

as time. at So, more discussions I'd continue. now, finalize we'll right anything, we say to say obviously, have that But, just the

David Windley

Thank Great. you. Okay.

Operator

Donald proceed from question. Capital with Our with next KeyBanc Please question Markets. comes Hooker your

Donald Hooker

me Practice from Great. on. for quarter? Thanks some maybe some -- update you for the some that you Fusion last there -- any on settlement other recoveries Is offsetting hoped think I talked third had letting that parties. from about

Rick Poulton

Yes.

to Justice work let's just that reached. of mean, the question. settlement very had that -- continue So, constructively with finalizing we'll parse I that We on Department we can

that we has documented doing when be are and that. obviously to So formalized

to we call. We of are of up hoping still them we announced working been at all the this terms by of your was we're last There's quarter that what end that be change second no on with settlement question? and -- the will this What year. material the part What? wrapped when the

Dennis Olis

Recoveries?

Rick Poulton

Yes. Recoveries?

time that, mentioned parties. We at have we recoveries. So third do of a a variety

it's to But of to even that'll so going But I that's expect Remember, be recoveries paid XXXX, yet we're play not a clear. -- so dollar a We road either, think out little beyond. the through out to happen from. down a have more. one just we going have -- possibly portion

Donald Hooker

Yes, yes. Sure, sure.

terms going we give revenue? a maybe to of you recurring of give as you quarter about sort are lot kind so, -- it in now, going guiding point. XXXX a The forward thinking seems you business at of this Street start Or like thinking about is are are how And -- to of your

decent investor forward how like give full Street going some feels Are from thinking are it here. there's going year to you an Or relations guiding of you about kind So predictability standpoint? a us outlook? The

Paul Black

versus this that. while in think, worked that the a has performance so unorthodox, of to approach We'll How we've Street mean, conversation attribute frankly The think little I our sound? tightest with year, perhaps think, I well. It's in tell that you -- January. far Look, I and I terms does quarterly expectations had, I

it recurring you XX% under consideration the business upfront The it operate revenue accounting of even that still simple is, truth largely some through revenue that that's put today. we model when not revenue, a standards has recurring with

last revenue So expecting challenge, and lot a predicting quarterly company is of To space Street what quarterly just put of The leaves down annual X% numbers quarterly expecting. disconnect a revenue, there. we of ranges the put potentially an out, to is I the between when for quarterly or even X% range a what out think, it's

So, the to we'll commercial guys. work that this continue make and in was though a -- it's And little think, January. for year, from we'll little monitor a input decision a it'll pretty but we'll year, through you we unorthodox even well. probably I guess continue take to And

Donald Hooker

Okay. this there one. nice one-time are revenue And real maybe in associated with with quick kind of sort any Northwell items pickup one renewals revenue of QX? of last Are kind Or there any in any renewal? that? bolus revenues large there these of And

Rick Poulton

all No. might bolus mentioned for bolus of seasonality earlier. thing is the And I Northwell. nothing There's -- for some the at the no that only even qualify word

Donald Hooker

you. Thank Super.

Operator

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

Eric Percher

follow thanks you Thank to question. on the Rick, with prior and for detail. maybe the

we too As clearly long-term look elements looking in that There to wonder year. there at anything guidance? number strengthening margin that get we for strengthening reaching revenue and out you relative kept next is carried quarter away from to XXXX, the before are I the gross earlier the

call would should keep is mind? last year there As out we the to in respect you we with anything forward, look

Rick Poulton

of non-organic look beginning are an potentially goal the year do -- three do what years. an thought or was this ambitious we ambitious we over basis on for next Eric, that's Yes. noteworthy. we there's mean, or an put I out would even we a we on and organic what to think expect what I don't goal anything particularly

range. through three We below As you quarters, we're that. point that out know certainly

out to the gate expected slower. also of come little a We

So its I our the we and out put middle fairway for good this we are of when a year. guidance outlook of expecting what feels think like the QX right in

differently, the did out that wouldn't you. to we that appropriate one fourth think to first there's weren't I we it's any reason right to for January. be a and now. we'll of in quarter differently we lot think testament -- some But feel be aspirations crazy so, put me I when a tell more is thinking say we But that If the

Eric Percher

context. indication trending good in can some give lastly That's we're without remaining how Veradigm margin, the or of And then us the business? gross you on

Dennis Olis

Well a said go the we expected in we from provide would the of XX% that for still will gross we as And reaffirm last again, year standpoint, on to when some quarter that end those call details into we QX. we do the margin quarter. the tomorrow. range But I had fourth range

XXXX as now, for to quarter's next QX see guidance some the an the that far on additional in goes, say from we'll QX XX% But As provide up range. right announcement. and should I'd improvement we about expect to and

Eric Percher

you. Thank

Operator

from with comes Jeff The next proceed question Blair. William Garro Please with your question.

Jeff Garro

bookings. Thanks Good afternoon. on couple for taking the a more questions. Maybe

then could results? -- And relative generally clarity that bookings broad first kind exactly of you maybe extension of order to the give on any quarter rest which the the heads. color of just just So on for Northwell of looking the magnitude

Rick Poulton

question I'm have We okay? Northwell to incremental because Yes. I and really defined business. clear. The define really contributed bookings, glad always have make that it as said want extensions bookings zero you to

while if it we business So business already into that you're bookings. just does our renewing obviously goes backlog, not in have count

Northwell So my said that. extension as XXXX. contributed is through in I The to nothing comments

and with But TouchWorks. managed none And indicated, of the of extension before. So them last in a up matches extension what seven-year those we're process it's year as drive I on extension it wrapping have they services bookings with activity. again, extensions the we a seven-year signed

Jeff Garro

look that year-end Very include impact we that for would Is Rick. from you, helpful. backlog Thank extension? I an should guess results? end-of-quarter the be would the the that something in follow-up the number

Dennis Olis

extension. the That roll And Rick managed as we noted, Yes. well. in backlog that the include as service when agreement backlog balance will the does complete

Jeff Garro

for bookings relative absolute lower me rest and quarter be would year-over-year the a basis, maybe of bookings. pretty more to but level a quarters The one on fourth strong on result of implied an And it. year growth. Got kind the of the

how we and not provide the impact should outlook versus of could behind and comparison that year full maybe you quarters maybe some year-to-date? the momentum bookings changing process thought changing think So the about the detail just given on

Rick Poulton

math your really we your record last a point I'll year. Well fourth quarter right. observation had quarter of out, -- bang-off year is -- last

are guidance for for dollars in just So won't the we in was QX implying absolute Historically, our we're the everybody. year-over-year the -- What it quarter always out strong the I you, of biggest same continue front -- have to QX. have think lift. but in

years. year, very changed has Some of buying But quarter. big a in we more fourth last pattern certainly bit, that little we've had recent seen a

So with we'll a think you got growth. see. pipeline. that comp I year-over-year XX% expect can don't nice We've But

Jeff Garro

Good questions Thanks taking to guys. hear. for the

Rick Poulton

Thank you.

Operator

question with from Please proceed Sandy Draper question. next SunTrust. your Our comes with

Sandy Draper

does technology Thanks integrated? much question the instant bring technology is TouchWorks think And into guess multi-tenant TouchWorks versus design? together front-end cloud the on separate and is, what have I it single -- back end interface then for about on and the are my taking get more trying partnership Northwell. and you you're When I the to Thanks. the planning a the Or moving question. really to very I this are is Sunrise? Sunrise with just path the you to a a be for guess Or going to same? follow-up opportunity

Rick Poulton

multi-tenant outpatient database ambulatory single go workflows technology. that. with definitely so on focus we're Sandy, that cloud The So pure the is and

is exercise TouchWorks should a modern think more But they to effectively today. technology. that base recognition we we and a as this So would tool user-friendly the do know them this we're with doing. integrate is what That's like Sunrise and user that an not

Sandy Draper

then And maybe helpful. a That's quick follow-up. Okay.

flat cycle like revenue I'm good that As happened management puts -- have are sequentially, good but not out here being the while. ticking to that this takes had mentioned earlier recurring revenue led point off that about the a being bookings. and year can recurring some take just the flat yet? uplift revenue bookings every seeing What flat at an Thanks. have and you've

Rick Poulton

Sandy. I right largely Well I has overall mean, been think flat revenue

And revenue. a what to fair, a about in for -- lift I it's three mean, the out but pretty going we're we're QX So three quarters what's QX. of -- out in versus last flat. been quarters in first what's expecting the be and we're seeing year-over-year nice for conversation happened

of seeing just same you're what revenue. flat that think is the relatively I So composition

I to bit, ratio it's going see slow. As to little a possibility a yes, grows the that revenue think but there's uptick be

really obviously. You're of a base talking off big

to up in I that going recurring. one dramatically revenue to think not But you with will it's start creep more see growth So quarter. towards change again

Sandy Draper

Okay. Thanks.

Rick Poulton

You're welcome.

Operator

your Our next with from question Citi. proceed question. comes with Please Demko Stephanie

Stephanie Demko

taking the for on you of continue train my Northwell Thank about thought question. partnership. that I'll

give And blank for product, an idea to differ Northwell you exchange what are that to would commercialize with from market what the and order in working a today? the economics and sort what to the start develop If in had exists them from helping this are with they Northwell HER, slate create this of you assistance?

Rick Poulton

industry the better. user with everybody thing that is, part I mean might think very help quickly that is me Stephanie second is, extremely in the of think -- question at the first risk satisfaction to But You of the a agree low. have is tools one mean of being the today's little could I on I I part repetitive

Stephanie Demko

Too many clicks?

Rick Poulton

I'm sorry?

Stephanie Demko

many too said clicks. I

Rick Poulton

burnout you it. know clicks, of physician Lots Yes.

stories. You the know all

the be able the was really of EHRs, use technology pay go performance first will part. back for -- modern the So and digitizing was focus to what again to most -- again if I generation

user So easier job clinical more a about now workflows you're trying make the build physician's and interfaces and rather talking that experience difficult. than reimagining to

do doing So Northwell. their own cannot And on with. with that's and space vendors in work that the we view. we blank our that's partnered why that's start the effectively we're EHR

part economics. question, I don't I really your about followed. think mentioned second The you I think of something I apologize.

Stephanie Demko

Yes.

about broader economics Northwell like it you develop would market? versus in look we economics given How helping their the think the is should what guys this. Just

Paul Black

run. pretty because There's far. or host Northwell's work them largest said some significant costs this the us to that having well could with know that reflect And has as avoid -- their customer there's You technology by make moving they us. Northwell what they all economic represent from That our incentive by of cloud-based solution. to technology the a business relationships size and significant they that own today ours scale for that they

this. So there's them for economic to of lots in participate motivation

to are economics with the to secondary take this trying reckon think their and and -- about again, it. do trying of the But to satisfaction are I from industry in really problem the lead physician perspective, something economics

so really much economics. what's motivating that's more than so them And

Stephanie Demko

Dennis, last one And for wrong quick guys on convert? Understood. you one are the

Dennis Olis

-- convert It you this as continues of became the know rate July year. in attractive coupon Well current a very it holds X.XX%. of

that all So we keeping debt different that maintain have available the options -- us and available our allows to cost capital looking us flexibility structure the we've got markets low. to a different debt and within our lot of capital at debt we're

sometime But act market So have very on soon. our lot able options to to or been we and would us the their we've coming even the would to what we'll a available with Perhaps come got end weeks that be months are. with fairly of coming we it's different the I here would of year, plans to soon. -- everybody before that expect in

Stephanie Demko

All right. Thank you guys.

Dennis Olis

you Thank Stephanie.

Operator

W. question. Matthew Please Our Gillmor Robert next question from Baird. comes your with proceed with

Matthew Gillmor

had the or puts always Hey, magnitude data drag I you there's Dennis that with costs center these was And in the the takes if associated contemplated that were know conversions. for with the thanks the costs? incremental a that us but the giving of some those costs and is for I sense question. mind mentioned quarter were you're curious a outlook year, overcoming? and Would

Dennis Olis

quarter in costs the had incurred than be we anticipated. previous single-digit The out the that to more we million we So actually contemplated costs we had had in what that outlook dollars given. came

that as center we off in not close those final again forward here year So, costs will XXXX. data carry this

Matthew Gillmor

all have. I you. That’s Thank Got it.

Operator

Jamie comes proceed Fargo. question next your with Please Wells with from question. Stockton Our

Jamie Stockton

you million left Dennis one Yeah, the have guys here, a from said $XXX capital good evening. buyback. just Maybe I quick on on think allocation

two burn cash the I or process is that kind here? you M&A thought there is think from you'll done primary the in of next use from the probably through three of quarters. get that Once the

Rick Poulton

shown our more Board reauthorizing been our that pretty at view. can with in with on had No. we've we work past with the of aggressive that. past agreement that conversations I our view to of from discount, share in ridiculous we're relative the know you peers And I all mean as mean in that, repurchases. trade you our we've the because And Jamie, it's is we industry we've under the that if buyback, of some

I capital think can be environment a allocation decisions on in. So our function of the we're what's

little a marketplace. make and our But foot of valued gas of we sure in We were that's of clearly owned wanted a it XX a the what sure already of we taken being we months to effectively. it was of digested off have Part bit last M&A make reflection part function or we so. the the working was how

what So think we'll allocation levers hopefully continue capital to at and those make decisions. would I expect us. of smart then that's we'll And look everybody

Jamie Stockton

Okay. you. Thank

Operator

Please question George next question. Our from comes with with your proceed Hill Deutsche Bank.

George Hill

-- given the to Thank about Good at expected guess Hey, Can up When is question. I they were not if say there's guys. at and the all. whether effect quick like don't year. be that component. go from And seems a afternoon that talk developed to you suspect whether go the or fourth then share for beginning clients revenue your next the taking follow-up of largest or the you probably on thanks revenue know and you. down? in quarter I should new it I Northwell. be renewal, taking client or either can new product one going a

Rick Poulton

little mean extensions sorry you to about we've them. clarify so with footprint something. question, may of the the Northwell on a are -- George, your had second you bit, I with think have out have the I part cut But a already we lot

there's maybe around edges think opportunities. extra a I bit So little the

running about not of today. are We a solutions talking to they're them couple

So there's some things around the edges.

about have really what talk a But that's for renewal they renewals, the today. bulk when we

change an organization recognize a it still -- tremendously has that Northwell grow is lot. is and continue to has aspirations growing this doesn't been So But further. and

they I grow cut like don't think you as we obviously -- grow I little. So out with a them. said

your first didn't really the I So part of hear question George.

you that. you're there want still if to So may re-ask

George Hill

Yes.

I fifty-fifty market extension So you as part sounds like renewal. guys given split? a co-development then guess I extension the I just like think a should or current relationship maintain product guess Northwell the that I like on that with it on able was the of I of... wondering kind the to what pricing just the guess that just they're guys together, levels or to the the will second is Well largest were of clarify And of guess question. your you economics we

Paul Black

Got it. The economics...

George Hill

Or should compression? price assume we

Paul Black

We in have renewals. economics current significant these it. preserve discounting We on do No. Yes. not

some just about, to respect we're deterioration kind why is do with So talking that. no -- split of presumption we this. let's on But platform And fifty-fifty the accurate. of don't your not

economic get and get built Let's platform the more then in for we'll and place it about the talk side.

George Hill

Thanks. enough. Fair

Operator

with comes The Close proceed with Richard next question question. Canaccord from Genuity. Please your

Richard Close

on Great. Northwell. bookings Thanks questions. for the and Congratulations

does your lot a Allscripts shifting in this up opportunity gain at towards you all? their Just and of this do thoughts your thoughts, Or sort see disadvantage? any to as at competitive So I'm of want announcement. guys an share Millennium curious longer talk just Cerner to market about term. for put AWS pick guys you around

Paul Black

substantial already in cloud that perspective, number the From we a run of a have our applications cloud.

where core those that's of we that's about think actually most not HER, you when anything -- So run.

records to already have a our And Azure Microsoft We with in we talk been future. how opportunity medical very in of have running today about electronic we cloud. we the actually can where what some are we've cloud-hosted from working the aggressively as move,

From increased a years. last the five course a competitive I would has competitiveness four make comment standpoint, substantially to our just over of the that

standpoint, from a that in you'd that cycle from a inpatient standpoint, electronic inpatient a spans in clinical cycle revenue to want revenue standpoint, the in record have health the do complete an from outpatient everything We outpatient. and an

the been positioning for that by potentially in switching of in we seven-plus as opportunity all last that does announces we switch may So be overall over Board a a anybody see sort an technology fact Anytime, some there's the since good years. be mandated an it's to as or our new been here large of offer have costs. competitive platform participate us that RFP if does institution, to

fixed in this when It's work goes next. the way. an people opportunity for marketplace, one event an So not historically day somebody doesn't and that. through the that like been switch flip just that It a it's has

Richard Close

that Great. growth you good maybe Paul and focusing a of perspectives. organic in you're points couple on margins. Thanks. then That's And mentioned increasing

on of Just in levers terms where get the hope around the the thoughts your curious what -- to main guys forward? margin in you going side and benefits

Paul Black

Yes.

do and need think that to targets evaluate our peers also have compared compared that and infrastructure we are we to to order and costs at what we XXXX need to always of for beyond. we company the in I drive how our EPS looking the to but

go an so each pile every opportunities we and through there's there. that year, important that's So

been out of continue and as organizations focus a There's come expecting Allscripts has synergies that family, that have part something other some that we've that some become we'll opportunities the of realizing of of to that been we on. of the be result the

nature them. over very well, And and the because where we've doing get profitable doing can are to And be to that regard when are around our of business time on and competitive what then in new get referred again that expect increased new competitiveness I results in the we third thing going-forward mentioned always quite been of we that marketplace, to out -- a that pretty you we Those our comments to mentioned my I footprint global in should company. that and generate our basis.

Richard Close

Okay. Congratulations. Thank you.

Paul Black

Thank you.

Operator

from Our Please next & question. your proceed Company. with Dougherty Mannheimer with question Gene comes

Gene Mannheimer

One for Thanks related more, collaboration, anticipate a the the with R&D to guys. step-up questions Northwell collaboration? the expense taking respect to that you in do

Rick Poulton

now right right should what enterprise our of outlook R&D not terms at much. I communicate If At this spend a certainly changes don't in question expect are overall overall we'll little that I on now. Yes. that But we that. think bit levels to least that point, I Gene, get expect our change spending earlier.

Gene Mannheimer

Okay.

Sorry that before. asked if was

of project, this with of spend Avenel with the a done leveraging lot work was made? So, a you've lot so the R&D are you

Rick Poulton

yes, infrastructure, starting that point using We're as Gene.

And so, We've investment what into fair amount that got we're having. is a of already correct.

Gene Mannheimer

you. Got

you two on pleased EIS you are say How with differently, business? Thanks would that about that And a the are in the let's that growing we're rate say business? up acquisition. asked today? reasonable years And McKesson to lot. it Okay. you Or coming since deal is retention rates

Rick Poulton

Yes.

piece So, to you, to attrition the how a investment I'll of And a Gene more me from OneContent. that make say, putting it over. was aside, after did piece so So, be standpoint, let That in not feel would it from business, acquiring financial recouped upfront impossible first start sold reminding called was coming we entire good the was of had we off which one or things than already yes, the in we it about I our that right? much base the a by I return -- transaction. embedded did mean that should was we that. I'd an bet we estimate say -- client

out that has as played And I'd say expected. largely

knew did we of that of going that. a job And So, to that. estimating happened happen, that seeing was is, we've what been some we I think, part, but good

becomes the little to weeks to the of embedded have a headwind been a why slow is off of just has lift And the bunch more when over year-over-year revenue away So kind start answer XX we attrition. of That had because, at it course as a of of months. to last overcome, we that results. looking is we part

we reality about complaining just the knew mean that. because to it I was not going that We're But that's happen. of

seen to change persuade particularly the and they've their to satisfaction able we're Sunrise, we of clients upgrades a of a the some around. feature with outgrew stay customer fuller is. mind is done and think -- the the probably And up to latest have transition Paragon clients capabilities those with offering make the customers who which some balance, version so set Paragon, is And to But nice considerably. Paragon going than with the thing, actually we

good to family trade people up them the kind seen we've been in So, and as that's well. keep of

hospital collective long-winded a answer that and internally. health created our system we feel But good And your overall, it's So, question. That's I good about transaction. to know think your I organization to scale question.

Gene Mannheimer

Absolutely. Thanks Rick.

Rick Poulton

Gene. Thanks,

Operator

would call closing like to for reached Paul the now session. We Black I question-and-answer end comments. the over of have to turn the

Paul Black

Allscripts. the historically But when JPMorgan company the pretty QX Thank what quarter. line full interest were you, for year challenging with see quarter to we in this outlook through a in importantly, been talked I'm a with at time. pull conference glad we a about, January. everyone in solid your has is

all what been proud also know, we've you've And of accomplish As proud our things on able clients. of and we've always happen. behalf lot very you there's to a able of heard I'm today to do and that can what I'm of been

thank company talking that much your very call again forward soon. interest look and and for you to with So, end our you I in to the

Operator

This concludes conference. today's

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

Veradigm (MDRX) 4 Nov 192019 Q3 Earnings call transcript