Wednesday, June 11, 2014

Seeking Alpha: Allscripts Still In The Middle Of A Challenging Transition

The executive management team at healthcare IT company Allscripts Healthcare Solutions (MDRX) has already accomplished quite a bit to its credit. Product quality has improved, clients have better product roadmaps, and higher investments in R&D should enhance the company's long-term competitiveness. The company has also carved out a solid position in the emerging population health space.

All of that said, Allscripts has just kept pace with Cerner (CERN) over the past one to two years, and lagged growth darling athenahealth (ATHN). Not only is the healthcare IT space brutally competitive in the largely penetrated acute care setting, but the company has not yet proven that its transition to a recurring revenue model (including SaaS) will support healthy margins. Allscripts does not look all that cheap, which is quite common in the healthcare IT space, though the company's relative valuation will hold more appeal to those investors who believe management can deliver EBITDA growth in the high teens or low 20%'s in the coming years.

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Allscripts Still In The Middle Of A Challenging Transition

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