Allscripts Rises on Contract Extension With North Shore
Allscripts Healthcare Solutions Inc. (MDRX), the electronic medical-records provider that lost half its market value last year, rose the most in almost 5 months after receiving a contract extension from its largest customer.
North Shore-LIJ Health System, a network of 16 hospitals in New York, agreed to a five-year contract extension for technical services, Allscripts said in a statement yesterday. The deal helped boost contract backlogs to $3.1 billion as of June 30, about a 13 percent increase quarter-over-quarter, Chicago-based Allscripts said in a separate statement today.
Investors had speculated that North Shore-LIJ would drop its services with Allscripts when its contract expires, said Greg Bolan, an analyst with Sterne Agree in a note today to clients. Allscripts has had a year of turmoil after it fired Chief Executive Officer Glen Tullman, who had led the company since 1999, in December amid shareholder questions about its leadership and a failed effort to sell itself.
“This agreement further builds on Allscripts’ relationship with its largest customer and serves as another sign of validation in the long-term turnaround plant that the company is pursuing,” said Michael Cherney, an analyst with ISI Group LLC in New York a note to clients today.
Bookings, an indication of future sales, likely exceeded $200 million in the second quarter compared with $194 million in the same period a year earlier, Allscripts said in the statement ahead of its scheduled earnings announcement Aug. 8.
“I am pleased to report tangible progress with several of our strategic initiatives,” said Allscripts CEO Paul Black in a statement. “Our focus on client obligations is beginning to deliver results as we see improving confidence from both inside and outside the Allscripts client base.”
Allscripts rose 5.5 percent to $14.11 at 10:05 a.m. in New York trading. The shares rose as much as 8.6 percent for their biggest intraday gain since Feb. 20. The stock gained 42 percent this year before today.
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