By John Persinos,
In this digital era, paper record keeping is increasingly antiquated — especially in the data-intensive, heavily regulated field of health care. The American medical-industrial complex has an insatiable hunger for information and providers as well as patients must continually feed the bureaucratic beast.
That’s where Electronic Medical Records (EMRs) come in. They’re digitized medical records, which require ultra-sophisticated software systems to process and analyze them. Accordingly, federally mandated electronic record keeping is a huge trend in healthcare that’s worth billions to the right IT company.
The healthcare system’s reliance on EMRs is getting greater, fueled by the 2009 American Recovery and Reinvestment Act (“Stimulus Bill”), which includes $19.2 billion as financial incentives to physicians, hospitals and other providers to implement EMR.
Allscripts Leading the EMR Chart
Chicago-based Allscripts Healthcare Solutions (MDRX) is in the sweet spot to benefit from these developments. Allscripts digitizes paper records and creates systems for end users to handle EMRs. The company has been picking up a growing roster of clients throughout the country as doctors and health care facilities scramble to adopt to the new healthcare landscape.
What’s more, whether you love it or despise it, Obamacare is now the law of the land, and Allscripts is benefiting from the sweeping healthcare law’s need for EMRs. There’s scant chance of Obamacare’s repeal, and the law’s provisions spell huge profits for smart companies such as Allscripts that lined up early to reap the spoils.
Meanwhile, the section of the Stimulus Bill related to EMRs is known as the Health Information Technology for Economic and Clinical Health Act, or HITECH, which doles out financial subsidies to physicians and hospitals to buy and install EMR systems. This sort of work is Allscripts’ bread and butter.
In addition to EMR incentives, there are penalties. HITECH stipulates that if an EMR system isn’t implemented by the end of 2014, not only will healthcare providers be unable to collect federal healthcare reimbursement under programs such as Medicare, but they also will slapped with fines and reimbursement restrictions.
Outlook for Allscripts Stock
Allscripts’ latest operating results tell a sanguine investment story. The company reported adjusted earnings per share (EPS) of 5 cents in the second quarter of 2014, for a year-over-year increase of a penny. This increase in EPS beat Wall Street’s consensus by a robust 25%. Second-quarter revenue hit $351.3 million, an increase of 1.9% compared to $344.8 million in the same period last year.
Allscripts’ second-quarter bookings jumped 9.3% to $234 million, compared to $214 million in the same year-ago quarter. Second-quarter adjusted operating earnings leaped a whopping 101.2% to $17.1 million, largely driven by greater operational efficiency.
These operating results show that health care providers are trying to beat the federal government’s deadlines and get in line with Obamacare. Allscripts is well-positioned to prosper in the multi-trillion dollar health care sector, as more Americans sign up for Obamacare while doctors, hospitals and clinics continue their belated push to digitize vast storehouses of paper records.
The digitizing of health information is a secular trend that should be immune from economic ups and downs, keeping Allscripts charging forward for years to come.
