Intrinsic value of Allscripts Healthcare Solutions, Inc. - MDRX

Previous Close

$9.90

  Intrinsic Value

$2.09

stock screener

  Rating & Target

str. sell

-79%

Previous close

$9.90

 
Intrinsic value

$2.09

 
Up/down potential

-79%

 
Rating

str. sell

We calculate the intrinsic value of MDRX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,785
  1,826
  1,873
  1,926
  1,984
  2,048
  2,118
  2,193
  2,275
  2,362
  2,455
  2,555
  2,661
  2,774
  2,894
  3,020
  3,155
  3,297
  3,447
  3,605
  3,772
  3,948
  4,134
  4,330
  4,536
  4,753
  4,981
  5,222
  5,475
  5,740
Variable operating expenses, $m
  1,312
  1,342
  1,376
  1,414
  1,457
  1,503
  1,554
  1,609
  1,668
  1,732
  1,788
  1,860
  1,937
  2,019
  2,107
  2,199
  2,297
  2,400
  2,509
  2,624
  2,746
  2,874
  3,010
  3,152
  3,302
  3,460
  3,626
  3,801
  3,986
  4,179
Fixed operating expenses, $m
  401
  409
  418
  428
  437
  447
  457
  467
  477
  487
  498
  509
  520
  532
  543
  555
  567
  580
  593
  606
  619
  633
  647
  661
  675
  690
  705
  721
  737
  753
Total operating expenses, $m
  1,713
  1,751
  1,794
  1,842
  1,894
  1,950
  2,011
  2,076
  2,145
  2,219
  2,286
  2,369
  2,457
  2,551
  2,650
  2,754
  2,864
  2,980
  3,102
  3,230
  3,365
  3,507
  3,657
  3,813
  3,977
  4,150
  4,331
  4,522
  4,723
  4,932
Operating income, $m
  73
  75
  79
  84
  90
  98
  107
  118
  130
  143
  170
  186
  204
  223
  244
  266
  290
  317
  345
  375
  407
  441
  478
  517
  558
  602
  649
  699
  752
  808
EBITDA, $m
  189
  194
  200
  208
  218
  230
  243
  258
  275
  293
  313
  335
  359
  385
  412
  442
  475
  509
  546
  585
  627
  671
  719
  769
  823
  880
  940
  1,004
  1,072
  1,143
Interest expense (income), $m
  42
  42
  44
  47
  49
  52
  56
  60
  64
  68
  73
  78
  83
  89
  96
  102
  109
  117
  124
  133
  142
  151
  161
  171
  182
  193
  205
  218
  232
  246
  261
Earnings before tax, $m
  30
  31
  32
  35
  38
  42
  48
  54
  62
  70
  92
  102
  114
  127
  142
  157
  174
  192
  212
  233
  256
  280
  307
  335
  365
  397
  431
  468
  506
  548
Tax expense, $m
  8
  8
  9
  9
  10
  11
  13
  15
  17
  19
  25
  28
  31
  34
  38
  42
  47
  52
  57
  63
  69
  76
  83
  90
  99
  107
  116
  126
  137
  148
Net income, $m
  22
  23
  24
  25
  28
  31
  35
  40
  45
  51
  67
  75
  83
  93
  103
  115
  127
  140
  155
  170
  187
  205
  224
  244
  266
  290
  315
  341
  370
  400

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,245
  3,320
  3,405
  3,501
  3,607
  3,724
  3,851
  3,988
  4,136
  4,295
  4,464
  4,646
  4,838
  5,043
  5,261
  5,492
  5,736
  5,994
  6,266
  6,554
  6,858
  7,179
  7,516
  7,872
  8,247
  8,641
  9,057
  9,494
  9,954
  10,437
Adjusted assets (=assets-cash), $m
  3,245
  3,320
  3,405
  3,501
  3,607
  3,724
  3,851
  3,988
  4,136
  4,295
  4,464
  4,646
  4,838
  5,043
  5,261
  5,492
  5,736
  5,994
  6,266
  6,554
  6,858
  7,179
  7,516
  7,872
  8,247
  8,641
  9,057
  9,494
  9,954
  10,437
Revenue / Adjusted assets
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
  0.550
Average production assets, $m
  1,135
  1,161
  1,191
  1,225
  1,262
  1,303
  1,347
  1,395
  1,447
  1,502
  1,562
  1,625
  1,692
  1,764
  1,840
  1,921
  2,006
  2,097
  2,192
  2,293
  2,399
  2,511
  2,629
  2,754
  2,885
  3,023
  3,168
  3,321
  3,482
  3,651
Working capital, $m
  -105
  -108
  -111
  -114
  -117
  -121
  -125
  -129
  -134
  -139
  -145
  -151
  -157
  -164
  -171
  -178
  -186
  -194
  -203
  -213
  -223
  -233
  -244
  -255
  -268
  -280
  -294
  -308
  -323
  -339
Total debt, $m
  701
  739
  783
  832
  886
  946
  1,011
  1,081
  1,157
  1,238
  1,325
  1,418
  1,516
  1,621
  1,733
  1,851
  1,976
  2,108
  2,247
  2,395
  2,550
  2,714
  2,887
  3,070
  3,261
  3,463
  3,676
  3,900
  4,135
  4,383
Total liabilities, $m
  1,662
  1,700
  1,744
  1,793
  1,847
  1,907
  1,972
  2,042
  2,118
  2,199
  2,286
  2,379
  2,477
  2,582
  2,694
  2,812
  2,937
  3,069
  3,208
  3,356
  3,511
  3,675
  3,848
  4,031
  4,222
  4,424
  4,637
  4,861
  5,096
  5,344
Total equity, $m
  1,584
  1,620
  1,662
  1,709
  1,760
  1,817
  1,879
  1,946
  2,018
  2,096
  2,179
  2,267
  2,361
  2,461
  2,567
  2,680
  2,799
  2,925
  3,058
  3,199
  3,347
  3,503
  3,668
  3,842
  4,024
  4,217
  4,420
  4,633
  4,857
  5,093
Total liabilities and equity, $m
  3,246
  3,320
  3,406
  3,502
  3,607
  3,724
  3,851
  3,988
  4,136
  4,295
  4,465
  4,646
  4,838
  5,043
  5,261
  5,492
  5,736
  5,994
  6,266
  6,555
  6,858
  7,178
  7,516
  7,873
  8,246
  8,641
  9,057
  9,494
  9,953
  10,437
Debt-to-equity ratio
  0.440
  0.460
  0.470
  0.490
  0.500
  0.520
  0.540
  0.560
  0.570
  0.590
  0.610
  0.630
  0.640
  0.660
  0.670
  0.690
  0.710
  0.720
  0.730
  0.750
  0.760
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.840
  0.850
  0.860
Adjusted equity ratio
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  22
  23
  24
  25
  28
  31
  35
  40
  45
  51
  67
  75
  83
  93
  103
  115
  127
  140
  155
  170
  187
  205
  224
  244
  266
  290
  315
  341
  370
  400
Depreciation, amort., depletion, $m
  116
  119
  121
  125
  128
  132
  136
  140
  145
  150
  143
  149
  155
  162
  169
  176
  184
  192
  201
  210
  220
  230
  241
  253
  265
  277
  291
  305
  319
  335
Funds from operations, $m
  139
  141
  145
  150
  156
  163
  171
  180
  190
  201
  210
  224
  239
  255
  272
  291
  311
  333
  356
  380
  407
  435
  465
  497
  531
  567
  605
  646
  689
  735
Change in working capital, $m
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
Cash from operations, $m
  141
  144
  148
  153
  159
  166
  175
  184
  195
  206
  216
  230
  245
  261
  279
  298
  319
  341
  365
  390
  417
  445
  476
  509
  543
  580
  619
  660
  704
  750
Maintenance CAPEX, $m
  -102
  -104
  -107
  -109
  -112
  -116
  -120
  -124
  -128
  -133
  -138
  -143
  -149
  -155
  -162
  -169
  -176
  -184
  -192
  -201
  -210
  -220
  -230
  -241
  -253
  -265
  -277
  -291
  -305
  -319
New CAPEX, $m
  -22
  -26
  -30
  -34
  -37
  -41
  -44
  -48
  -52
  -56
  -59
  -63
  -67
  -72
  -76
  -81
  -85
  -90
  -95
  -101
  -106
  -112
  -118
  -124
  -131
  -138
  -145
  -153
  -161
  -169
Cash from investing activities, $m
  -124
  -130
  -137
  -143
  -149
  -157
  -164
  -172
  -180
  -189
  -197
  -206
  -216
  -227
  -238
  -250
  -261
  -274
  -287
  -302
  -316
  -332
  -348
  -365
  -384
  -403
  -422
  -444
  -466
  -488
Free cash flow, $m
  16
  13
  11
  10
  10
  10
  11
  13
  15
  18
  19
  23
  28
  34
  41
  49
  57
  67
  77
  88
  100
  113
  128
  143
  159
  177
  196
  217
  239
  262
Issuance/(repayment) of debt, $m
  31
  38
  44
  49
  54
  60
  65
  70
  76
  81
  87
  93
  99
  105
  111
  118
  125
  132
  140
  147
  156
  164
  173
  182
  192
  202
  213
  224
  235
  248
Issuance/(repurchase) of shares, $m
  10
  14
  18
  22
  24
  26
  27
  27
  27
  26
  16
  14
  11
  7
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  41
  52
  62
  71
  78
  86
  92
  97
  103
  107
  103
  107
  110
  112
  114
  118
  125
  132
  140
  147
  156
  164
  173
  182
  192
  202
  213
  224
  235
  248
Total cash flow (excl. dividends), $m
  58
  66
  73
  81
  88
  95
  103
  110
  118
  126
  121
  130
  138
  147
  155
  167
  182
  199
  216
  235
  256
  277
  300
  325
  351
  379
  409
  440
  474
  509
Retained Cash Flow (-), $m
  -33
  -36
  -42
  -47
  -52
  -57
  -62
  -67
  -72
  -77
  -83
  -88
  -94
  -100
  -106
  -113
  -119
  -126
  -133
  -141
  -148
  -156
  -165
  -174
  -183
  -193
  -203
  -213
  -224
  -236
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  25
  29
  32
  34
  36
  39
  41
  43
  46
  48
  39
  41
  44
  46
  49
  54
  63
  73
  83
  95
  107
  121
  136
  151
  168
  187
  206
  227
  250
  273
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  24
  26
  26
  26
  25
  25
  24
  22
  21
  20
  14
  12
  11
  10
  9
  8
  8
  7
  6
  5
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
Current shareholders' claim on cash, %
  99.4
  98.6
  97.6
  96.5
  95.2
  94.0
  92.7
  91.5
  90.3
  89.3
  88.6
  88.1
  87.8
  87.5
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4
  87.4

Allscripts Healthcare Solutions, Inc. (Allscripts) delivers information technology (IT) solutions and services to help healthcare organizations. The Company operates through three segments: Clinical and Financial Solutions, Population Health, and Netsmart. The Clinical and Financial Solutions segment includes the sale of integrated clinical software applications and financial and information solutions. The Population Health segment includes the sale of health management and coordinated care solutions, which focus on hospitals, health systems, other care facilities and accountable care organizations (ACOs). The Netsmart segment provides software and technology solutions to the health and human services industry, which includes behavioral health, addiction treatment, intellectual and developmental disability services, child and family services and public health segments, as well as to post-acute home care organizations.

FINANCIAL RATIOS  of  Allscripts Healthcare Solutions, Inc. (MDRX)

Valuation Ratios
P/E Ratio 595.7
Price to Sales 1.2
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 6.6
Price to Free Cash Flow 13.6
Growth Rates
Sales Growth Rate 11.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 102.9%
Cap. Spend. - 3 Yr. Gr. Rate 3.5%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 105.8%
Total Debt to Equity 108%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.2%
Ret/ On Assets - 3 Yr. Avg. -1.2%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity 0.2%
Return On Equity - 3 Yr. Avg. -1.7%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 43.3%
Gross Margin - 3 Yr. Avg. 41.6%
EBITDA Margin 12.8%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 1.1%
Pre-Tax Margin -1%
Pre-Tax Margin - 3 Yr. Avg. -1.9%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. -1.6%
Effective Tax Rate 120%
Eff/ Tax Rate - 3 Yr. Avg. 141%
Payout Ratio 0%

MDRX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MDRX stock intrinsic value calculation we used $1750 million for the last fiscal year's total revenue generated by Allscripts Healthcare Solutions, Inc.. The default revenue input number comes from 0001 income statement of Allscripts Healthcare Solutions, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MDRX stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.1%, whose default value for MDRX is calculated based on our internal credit rating of Allscripts Healthcare Solutions, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Allscripts Healthcare Solutions, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MDRX stock the variable cost ratio is equal to 73.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $392 million in the base year in the intrinsic value calculation for MDRX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.3% for Allscripts Healthcare Solutions, Inc..

Corporate tax rate of 27% is the nominal tax rate for Allscripts Healthcare Solutions, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MDRX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MDRX are equal to 63.6%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Allscripts Healthcare Solutions, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MDRX is equal to -5.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1551.113 million for Allscripts Healthcare Solutions, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 171.214 million for Allscripts Healthcare Solutions, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Allscripts Healthcare Solutions, Inc. at the current share price and the inputted number of shares is $1.7 billion.

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