Allscripts Reports Record Fourth Quarter 2005 Results; Net Income Increases More Than 200% For The Year

Allscripts (Nasdaq:MDRX), the leading provider of clinical software, connectivity and information solutions that physicians use to improve healthcare, today announced results for the three months and year ended December 31, 2005.

CHICAGO (January 31, 2006) –

Allscripts (Nasdaq:MDRX), the leading provider of clinical software, connectivity and information solutions that physicians use to improve healthcare, today announced results for the three months and year ended December 31, 2005.

Total revenue for the three months ended December 31, 2005 was $34.2 million, compared to $26.3 million for the same period last year. Revenue from software and related services for the three months ended December 31, 2005 was $18.2 million, compared to $14.3 million for the same period last year, increasing by 28%.

Gross margin percentage was 45.5% for the fourth quarter of 2005, compared to 46.9% during the fourth quarter of 2004.

Net income for the three months ended December 31, 2005 was $3.4 million, or $0.08 per diluted share, compared to net income of $1.4 million, or $0.03 per diluted share, for the same period last year, a net income increase of 143%. As previously disclosed, net income for the three months ended December 31, 2005 includes a non-cash, non-recurring stock-based compensation charge related to the acceleration of certain options amounting to approximately $0.5 million. Without this charge, diluted earnings per share for the fourth quarter 2005 would have been $0.09. A reconciliation of earnings per share excluding the option acceleration expense to GAAP earnings per share is included as part of this press release.

As of December 31, 2005, the Company had cash and marketable securities of $146.1 million.

“In 2005, the market for clinical automation continued to accelerate as the electronic health record became part of the ‘black bag’ of medicine. Allscripts played a leadership role in driving this transformation and our record results show that we continue to gain traction,” stated Glen Tullman, Chief Executive Officer of Allscripts. “The Company has never been better positioned and our pending acquisition of A4 Health Systems will result in Allscripts being the clear leader across all segments of the ambulatory market. I appreciate our clients continued support and am very proud of our team and the progress we made during the year towards our vision of becoming an indispensable part of the way physicians practice medicine.”

Total revenue for the year ended December 31, 2005 was $120.6 million, compared to $100.8 million for 2004. Revenue from software and related services for the year ended December 31, 2005 was $65.2 million, compared to $44.1 million for 2004, increasing by 48%.

Total gross margin percentage was 45.5% for the year ended December 31, 2005, compared to 42.3% for the year ended December 31, 2004.

Net income for the year ended December 31, 2005 was $9.7 million, or $0.23 per diluted share, compared to net income of $3.1 million, or $0.07 per diluted share, for 2004, a net income increase of 212%. Without the option acceleration expense recognized in the fourth quarter of 2005, diluted earnings per share would have been $0.24 for 2005.

Allscripts offered the following general guidance related to 2006, excluding any potential impact from the proposed acquisition of A4 Health Systems. The Company’s total revenue target for 2006 is expected to exceed $145 million. It anticipates that earnings per share will be in the range of $0.45 to $0.47 per diluted share, which excludes additional stock-based compensation expense.

Allscripts will conduct a conference call on Tuesday, January 31, 2006 at 4:30 PM eastern time. The conference call can be accessed by dialing 1-800-374-0526, or via the Internet at www.allscripts.com. A recording of the conference call will be available for review through February 14, 2006, at www.allscripts.com or by calling 1-800-642-1687, ID # 4715321.

About Allscripts

Allscripts is the leading provider of clinical software, connectivity and information solutions that physicians use to improve healthcare. The Company’s business groups provide unique solutions that inform, connect and transform healthcare. The Clinical Solutions Group’s award-winning clinical software applications include Electronic Health Record, e-prescribing and document imaging solutions. Additionally, Allscripts provides clinical product education and connectivity solutions for physicians and patients through its Physicians Interactive(TM) Group and medical fulfillment services through its Medication Services Group. To learn more, visit Allscripts on the Web at www.allscripts.com.

This announcement may contain forward-looking statements about Allscripts that involve risks and uncertainties, including statements involving our pending acquisition of A4 Health Systems, Inc. and guidance related to 2006. These statements are developed by combining currently available information with Allscripts beliefs and assumptions. Forward-looking statements do not guarantee future performance. Because Allscripts cannot predict all of the risks and uncertainties that may affect it, or control the ones it does predict, Allscripts’ actual results may be materially different from the results expressed in its forward-looking statements. For a more complete discussion of the risks, uncertainties and assumptions that may affect Allscripts, see the Company’s 2004 Annual Report on Form 10-K, available through the Web site maintained by the Securities and Exchange Commission at www.sec.gov.

Allscripts Healthcare Solutions, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands)
(Unaudited)

December 31, December 31,
Assets 2005 2004
—— ———— ————

Current assets:
Cash and cash equivalents $60,905 $16,972
Marketable securities 54,408 22,796
Accounts receivable, net 29,244 21,382
Other receivables 502 627
Inventories 2,174 2,372
Prepaid expenses and other current assets 5,811 3,571
———— ————
Total current assets 153,044 67,720

Long-term marketable securities 30,750 88,471
Fixed assets, net 2,753 2,366
Software development costs, net 6,409 6,270
Intangible assets, net 9,151 10,833
Goodwill 13,760 13,713
Other assets 5,097 4,804
———— ————
Total assets $220,964 $194,177
============ ============

Liabilities and Stockholders’ Equity
————————————

Current liabilities:
Accounts payable $8,630 $5,981
Accrued liabilities 13,791 12,218
Deferred revenue 17,306 14,607
———— ————
Total current liabilities 39,727 32,806

Long-term debt 82,500 82,500
Other liabilities 318 178
———— ————
Total liabilities 122,545 115,484

Stockholders’ equity 98,419 78,693
———— ————

Total liabilities and stockholders’
equity $220,964 $194,177
============ ============

Allscripts Healthcare Solutions, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per-share amounts)
(Unaudited)

Three Months Ended For the Year Ended
December 31, December 31,
2005 2004 2005 2004
——– ——– ——– ——–

Revenue:
Prepackaged medications $12,789 $9,342 $45,609 $44,733
Software and related services 18,249 14,306 65,166 44,121
Information services 3,159 2,665 9,789 11,916
——– ——– ——– ——–
Total revenue 34,197 26,313 120,564 100,770

Cost of revenue:
Prepackaged medications 10,873 7,317 38,046 35,744
Software and related services 6,908 5,154 23,507 15,858
Information services 849 1,506 4,136 6,520
——– ——– ——– ——–
Total cost of revenue 18,630 13,977 65,689 58,122
——– ——– ——– ——–

Gross profit 15,567 12,336 54,875 42,648

Operating expenses:
Selling, general and
administrative expenses 11,510 10,337 43,304 37,653
Stock-based compensation
expense 558 – 604 –
Amortization of intangibles 436 441 1,744 1,752
——– ——– ——– ——–
Income from operations 3,063 1,558 9,223 3,243

Interest expense (880) (884) (3,516) (1,717)
Interest income 1,230 802 4,128 1,675
Other expense, net (10) (73) (125) (93)
——– ——– ——– ——–
Income before income taxes 3,403 1,403 9,710 3,108

Income taxes – – – –
——– ——– ——– ——–
Net income $3,403 $1,403 $9,710 $3,108
======== ======== ======== ========

Net income per share – basic $0.08 $0.04 $0.24 $0.08
======== ======== ======== ========

Net income per share – diluted $0.08 $0.03 $0.23 $0.07
======== ======== ======== ========

Weighted average shares of common
stock outstanding used in
computing basic net income
per share 40,812 38,484 40,045 38,979
======== ======== ======== ========

Weighted average shares of common
stock outstanding used in
computing diluted net income per
share 43,890 41,439 43,068 41,592
======== ======== ======== ========

Earnings per share reconciliation:
Net income, as reported-GAAP
(unaudited) $3,403 $1,403 $9,710 $3,108

Add: Stock-based compensation
charge for acceleration of options 518 – 518 –
——– ——– ——– ——–

Net income excluding stock-based
compensation charge $3,921 $1,403 $10,228 $3,108
======== ======== ======== ========

Net income per share excluding
stock-based compensation charge –
basic $0.10 $0.04 $0.26 $0.08
======== ======== ======== ========

Net income per share excluding
stock-based compensation charge –
diluted $0.09 $0.03 $0.24 $0.07
======== ======== ======== ========

CONTACT: Allscripts
Dan Michelson, 312-506-1217
dan.michelson@allscripts.co
or
Bill Davis, 312-506-1211
bill.davis@allscripts.com

SOURCE: Allscripts

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Source: Allscripts