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Veradigm (MDRX) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The fourth quarter of 2020 was the best quarterly performance in years, with total non-GAAP revenue of $415 million, up from $402 million in the third quarter [31] - Adjusted EBITDA margin for the quarter was 23.4%, reflecting nearly a 1,000 basis point improvement from the first quarter of 2020 and a 700 basis point improvement year-over-year [32] - Free cash flow from continuing operations was $30 million during the fourth quarter, with operating cash flow of $56 million, excluding a $58 million payment to the DOJ [35][36] Business Line Data and Key Metrics Changes - The Veradigm business unit saw strong momentum, returning to growth with significant new bookings and larger deals, particularly in clinical research and data exchange [18] - The ambulatory enterprise added 35 new logos in the TouchWorks Professional solutions, indicating strong demand for end-to-end clinical and financial solutions [17] - The core clinical and financial solutions segment showed significant EBITDA margin expansion, although it is expected to be influenced by seasonal patterns [75] Market Data and Key Metrics Changes - The backlog increased to $4.1 billion at year-end, reflecting a considerable level of client renewals secured during the year [30] - The company noted that the US EHR market is largely a replacement market, with opportunities for growth in both domestic and international markets [66] Company Strategy and Development Direction - The company is focused on migrating clients to cloud solutions, which is expected to lower total cost of ownership and improve EHR experiences [14] - Allscripts completed the sale of EPSi and CarePort Health to unlock value from its solutions portfolio and reduce leverage [20] - The company aims to leverage its strong balance sheet and sustainable cost structure to drive long-term value creation [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage costs and drive year-over-year margin improvement, with a revenue outlook for 2021 set at $1.5 billion [39][40] - The management team highlighted the importance of community-based coordinated care in response to the pandemic, emphasizing the need for integrated health solutions [12][13] - The company expects to see continued growth in the Veradigm business and anticipates a stable operating environment compared to the previous year [66] Other Important Information - Allscripts was recognized as the most trusted partner in community hospitals, reflecting its commitment to client success and collaboration [22] - The company published its first corporate responsibility report, highlighting its positive impact on communities during a challenging year [24] Q&A Session Summary Question: Impact of the new Truvada Organization on Veradigm - Management does not foresee any direct impact on Veradigm's outlook from the new organization [45] Question: Migration of Sunrise to the cloud - The migration process has not been delayed by the pandemic and is expected to proceed with careful planning [46] Question: Drivers of performance in the life sciences business - The growth in Veradigm is attributed to a large market share and extensive data rights, leading to increased recognition of its value [50] Question: Adjusted EBITDA margins performance - The margin improvement was driven by a combination of better revenue mix and continued cost reductions [52] Question: Future growth opportunities - Future growth is expected from replacement market opportunities, international expansion, and new use cases in the US [66] Question: Capital deployment and share buyback - The company plans to continue share repurchases and may consider small acquisitions, depending on opportunities [60] Question: Retention performance in the core segment - Retention rates improved in 2020, with low attrition numbers indicating a positive trend for 2021 [90] Question: Feedback on Sunrise 20.0 - The response to Sunrise 20.0 has been positive, with clients eager to participate in the new features and capabilities [88]