Company Becomes Leading Provider of Hospital Care Management Solutions,
Strengthens Connectivity Across the Entire Care Continuum
CHICAGO, Jan. 2 /PRNewswire-FirstCall/ -- Allscripts, the leading
provider of clinical software, connectivity and information solutions that
physicians use to improve healthcare, announced today it has acquired all
of the outstanding stock of Extended Care Information Network (ECIN), a
leading provider of hospital care management and discharge planning
software, for approximately $90 million in cash. The acquisition combines
the two industry leaders in care management and enables Allscripts to
connect another key component of the healthcare delivery system -- the
exchange of patient information between hospital case managers, physicians
outside the hospital, and the growing number of post-acute care facilities
nationwide.
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ECIN's web-based "software as a service" solutions automate and
streamline the entire care management process in hospitals, from admission
through discharge, resulting in increased productivity, improved patient
throughput and better outcomes. The privately-held company has a client
base of more than 400 hospitals and nearly 5,000 post-acute care facilities
-- nursing homes, assisted living and other facilities to whom hospitals
refer patients in need of long-term care or short-term residential-based
rehabilitation. Along with Allscripts existing Canopy(R) care management
solution, the acquisition gives the company one of the largest installed
bases of care management clients in the nation, with nearly 700 combined
hospitals, as well as one of the largest networks of post-acute care
facilities. Both care management solutions are deployed using an
application service provider (ASP) model designed for rapid implementation
with minimal use of hospital IT support staff.
"Our acquisition of ECIN represents the convergence of two market
leaders and will help connect hundreds of hospitals and thousands of
post-acute care facilities to our network of ambulatory physicians,
bringing us one step closer to our vision of a truly interconnected
healthcare system," said Glen Tullman, Chief Executive Officer of
Allscripts. "This combination provides significant leverage for each of our
product offerings and broadens Allscripts relationships in the hospital
market at a time when hospitals are becoming more important influencers in
the Electronic Health Record sales process."
Allscripts also announced the creation of a new Hospital Solutions
Group within the company to be directed by Jeff Surges, Chief Executive
Officer of ECIN. The new Allscripts business unit will provide a suite of
products and services under one umbrella, combining ECIN with the company's
emergency department information systems (EDIS) and its existing care
management solution, Canopy(R). Allscripts will continue to support both of
its care management products for the foreseeable future.
With the addition of ECIN, Allscripts is positioned to benefit from
recent trends that are driving the automation of healthcare information and
the manner in which it is exchanged between hospitals, physicians outside
the hospital, and post-acute care facilities. Recent changes to the federal
Stark regulations, for example, now allow hospitals to assist affiliated
physicians in adopting Electronic Health Record and Electronic Prescribing
to enhance patient safety and quality of care. Allscripts has been a major
beneficiary of that change, with hospital systems across the country
selecting the company's solutions for their employed physicians as well as
affiliated and non-affiliated physicians in their local communities.
At the same time, the federal government and other stakeholders
recently proposed requiring the automation of Medicare patient information
exchanged between hospitals and the providers to whom they refer discharged
patients. However, according to a recent survey by the American Care
Management Association, less than 20 percent of hospitals have automated
their discharge planning. A 2006 study by Investor Group Services, an Ernst
& Young LLP company, estimated the market for care management and discharge
planning software in hospitals that will likely consider automating these
functions at between $300 million and $400 million per year in recurring
fees.
"Allscripts and ECIN provide a broad suite of solutions that will
appeal to hospital executives, who are increasingly focused on creating a
seamless connection to the ambulatory physicians who provide referrals, and
to the post-acute care facilities that accept many of their patients," said
Jeff Surges, who brings many years of experience managing high-growth
technology within the healthcare industry, including previously serving as
President and General Manager of McKesson's Resource Management Group.
"ECIN's clients will gain long-term strength and access to more diverse
products as well as accelerated connectivity between care management and
other hospital departments, payors and post-acute care providers."
ECIN Transaction
Headquartered in Chicago, with over 80 employees, ECIN generated
estimated revenues of approximately $19 million in 2007, approximately $7.1
million to $7.4 million of Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA), not accounting for deal-related expenses, and
approximately $4.6 million to $4.9 million of Earnings Before Income Taxes.
Allscripts financed the acquisition using cash on hand and through $50
million of borrowings under a new $60 million credit facility.
Outlook
The Company maintains its outlook for 2008 with annualized growth in
total revenue of approximately 20% to 25%, which is reflective of
approximately 25% to 30% in annualized growth from software and related
services. This target represents annualized growth in GAAP earnings per
diluted share of 40% to 50%. Annualized growth in non-GAAP adjusted
earnings per diluted share is expected to be 45% to 50%, which contemplates
approximately $9 million, or $0.13 per diluted share, of deal-related
amortization and approximately $6 million, or $0.09 per diluted share, of
stock-based compensation, both net of tax. See "Non-GAAP Financial
Measures" below for a discussion of non-GAAP adjusted earnings and earnings
per share.
Explanation of Non-GAAP Financial Measures
Allscripts reports its financial results in accordance with generally
accepted accounting principles, or GAAP. To supplement this information,
Allscripts presents information regarding non-GAAP adjusted earnings (and
related per share amounts), which is a non-GAAP financial measure under
Section 101 of Regulation G under the Securities Exchange Act of 1934, as
amended. Non-GAAP adjusted earnings consists of GAAP net income, excluding
acquisition-related amortization and stock-based compensation expense under
SFAS No. 123R, in each case net of any related tax benefit.
-- Acquisition-Related Amortization. Acquisition-related amortization
expense is a non-cash expense arising from the acquisition of
intangible assets in connection with acquisitions or investments.
Allscripts excludes acquisition-related amortization expense from
non-GAAP adjusted earnings because it believes (i) the amount of such
expenses in any specific period may not directly correlate to the
underlying performance of Allscripts business operations and (ii) such
expenses can vary significantly between periods as a result of new
acquisitions and full amortization of previously acquired intangible
assets. Investors should note that the use of these intangible assets
contributed to revenue in the periods presented and will contribute to
future revenue generation and should also note that such expense will
recur in future periods.
-- Stock-Based Compensation Expense. Stock-based compensation expense is a
non-cash expense arising from the grant of stock awards to employees.
Allscripts excludes stock-based compensation expense from non-GAAP
adjusted earnings because it believes (i) the amount of such expenses
in any specific period may not directly correlate to the underlying
performance of Allscripts business operations and (ii) such expenses
can vary significantly between periods as a result of the timing of
grants of new stock-based awards, including grants in connection with
acquisitions. Investors should note that stock-based compensation is a
key incentive offered to employees whose efforts contributed to the
operating results in the periods presented and are expected to
contribute to operating results in future periods and should also note
that such expense will recur in future periods.
Management also believes that non-GAAP adjusted earnings (and related
per share amounts) provides useful supplemental information to management
and investors regarding the underlying performance of the Company's
business operations and facilitates comparisons to our historical operating
results. Management also uses this information internally for forecasting
and budgeting as it believes that the measure is indicative of the
Company's core operating results. Note, however, that non-GAAP adjusted
earnings is a performance measure only, and it does not provide any measure
of the Company's cash flow or liquidity. Non-GAAP financial measures are
not in accordance with, or an alternative for, measures of financial
performance prepared in accordance with GAAP and may be different from
non-GAAP measures used by other companies. Non-GAAP measures have
limitations in that they do not reflect all of the amounts associated with
Allscripts results of operations as determined in accordance with GAAP.
Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures with GAAP financial measures
contained within the attached condensed consolidated financial statements.
About Allscripts
Allscripts (Nasdaq: MDRX) is the leading provider of clinical software,
connectivity and information solutions that physicians use to improve
healthcare. The company's unique solutions inform, connect and transform
healthcare, delivering improved care at lower cost. More than 40,000
physicians and thousands of other healthcare professionals in clinics and
hospitals nationwide utilize Allscripts to automate and connect everyday
tasks such as writing prescriptions, documenting patient care, managing
billing and scheduling, and safely discharging patients. To learn more,
visit Allscripts at http://www.allscripts.com.
This news release may contain forward-looking statements within the
meaning of the federal securities laws. Statements regarding future events,
developments, the Company's future performance, as well as management's
expectations, beliefs, intentions, plans, estimates or projections relating
to the future are forward-looking statements within the meaning of these
laws. These forward-looking statements are subject to a number of risks and
uncertainties, some of which are outlined below. As a result, actual
results may vary materially from those anticipated by the forward-looking
statements. Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements
are: the volume and timing of systems sales and installations; length of
sales cycles and the installation process; the possibility that products
will not achieve or sustain market acceptance; the timing, cost and success
or failure of new product and service introductions, development and
product upgrade releases; competitive pressures including product
offerings, pricing and promotional activities; our ability to establish and
maintain strategic relationships; undetected errors or similar problems in
our software products; compliance with existing laws, regulations and
industry initiatives and future changes in laws or regulations in the
healthcare industry; possible regulation of the Company's software by the
U.S. Food and Drug Administration; the possibility of product-related
liabilities; our ability to attract and retain qualified personnel; our
ability to identify and complete acquisitions, manage our growth and
integrate acquisitions (including the ECIN acquisition); maintaining our
intellectual property rights and litigation involving intellectual property
rights; risks related to third-party suppliers; our ability to obtain, use
or successfully integrate third-party licensed technology; breach of our
security by third parties; and the risk factors detailed from time to time
in our reports filed with the Securities and Exchange Commission, including
our 2006 Annual Report on Form 10-K available through the Web site
maintained by the Securities and Exchange Commission at http://www.sec.gov. The
Company undertakes no obligation to update publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise.
SOURCE Allscripts
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http://www.allscripts.com
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CONTACT:
Dan Michelson, Chief Marketing Officer,
+1-312-506-1217, dan.michelson@allscripts.com, or Todd Stein,
Senior Manager/Public Relations, +1-312-506-1216,
todd.stein@allscripts.com, or William Davis, Chief Financial
Officer, +1-312-506-1211, bill.davis@allscripts.com, all of
Allscripts
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