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

The Motley Fool: Does Athenahealth Inc's Growth Justify the Price?

Quality growth rarely comes cheap, but Wall Street seems to have taken it a little too far in the case of Athenahealth (NASDAQ: ATHN  ) . The ambulatory care market is still a growth opportunity, and the company is only just beginning to develop products that can seriously address the acute care market. Even so, it will take truly remarkable growth and share gains for Athenahealth to grow into its current valuation.

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Does Athenahealth Inc's Growth Justify the Price?

The Motley Fool: A New Strategy At Allscripts Healthcare Solutions Is Making All The Difference

The health care IT space is still very competitive, with Epic and Cerner (NASDAQ: CERN  ) holding large shares in large hospitals, but new management has made a big difference for Allscripts (NASDAQ: MDRX  ) . Strong bookings put the company on good footing for 2014, while growing interest in population health and a sizable replacement opportunity in electronic health records (EHR) offer more enduring potential.


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A New Strategy At Allscripts Healthcare Solutions Is Making All The Difference

Investopedia: Premium-Priced athenahealth Leaves Little Room For Error

athenahealth (Nasdaq:ATHN) offers another example of how it's important to separate a company from its stock. From the perspective of an operating company, there are a lot of positive things going on at this provider of software and services to medical practices. From a stock perspective, though, expectations are already red-hot and success is taken as a given, leaving little on the table for the future and significantly increasing the risk that any future earnings shortfall will be met with a painful sell-off in the shares.

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http://stocks.investopedia.com/stock-analysis/2012/Premium-Price-athenahealth-Leaves-Little-Room-For-Error-ATHN-GE-SI-MDRX0601.aspx

Investopedia: ADP A-OK ... And Everybody Knows It

As I've said recently in relation to McDonald's (NYSE:MCD), Coca-Cola (NYSE:KO) and Nestle (OTCBB:NSRGY), top-notch companies are a mixed blessing for investors - great to hold for years at a time once you own them, but very hard to ever buy at a notable discount. Automatic Data Processing (Nasdaq:ADP) fits that bill as well, as even the most negative or bearish analysts still seem to go out of their way to affirm their respect for the company, its strategy and management.

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http://stocks.investopedia.com/stock-analysis/2012/ADP-A-OK--And-Everyone-Knows-It-ADP-PAYX-INTU-ATHN0504.aspx

Seeking Alpha: Athenahealth Can't Maintain Its Sky-High Valuation

The market is full of misunderstood companies, as well as perhaps three times that number of companies where management believes Wall Street just doesn't understand the business or the proper value for it. With health IT provider athenahealth (ATHN) being one of the relatively rare companies where a majority of analysts are not positive on the stock and where the current price is above the average price target, it seems like there's some disconnect in this name.

While the top-line growth at athenahealth is indeed impressive, and the growth runway would seem to be long and wide indeed, this is not a stock where investors can afford to be complacent. The stock's valuation already assumes that the company emerges as a major player in healthcare IT, but investors may want to ask whether the company's progress with enterprise-scale customers and sales leverage merits such a lofty expectation.

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Athenahealth Can't Maintain Its Sky-High Valuation

Allscripts + Eclipsys = A Deal That Makes Sense

A disturbing number of corporate M&A transactions end up being disappointing wastes of time and shareholders' money. In fact, I would go so far as to say that a lot of deals are about executive ego, hiding an inability to grow organically, or simply giving institutional shareholders the illusion that management is "active". 

I am putting all of that aside today. I actually do think that the combination of Allscripts (Nasdaq:MDRX) and Eclipsys (Nasdaq:ECLP) is one that makes a lot of sense. Accordingly, this may be one of the relatively rare deals that actually benefits all parties involved.  

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http://stocks.investopedia.com/stock-analysis/2010/Allscripts--Eclipsys--A-Deal-That-Makes-Sense-MDRX-ECLP-CERN-GE-SI-ORCL-ATHN0609.aspx