Allscripts Healthcare Solutions Inc (MDRX) Solutions: Worth A Shot? – Cerner Corporation (CERN)

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Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has been through a pretty rough patch. The company, which makes electronic medical record software for large healthcare organizations, has seen turmoil and turnover on its board of directors, the departure of its CEO, a stinging rebuke from major shareholders, and the possibility of throwing in the towel and selling out.

Not surprisingly, the tech vendor, which has a market cap of $1.8 billion, has seen its stock price plummet, losing 48 percent of its value over the last year. That’s something of a trick in an era when hospitals are rewarded handsomely by the government for buying EMRs, courtesy of federal legislation allocating billions in incentive bucks.

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)

Compare that to a competitor like  Cerner Corporation (NASDAQ:CERN), and you get a picture of just what kind of market seems to be passing Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) by. Cerner Corporation (NASDAQ:CERN), which closed at $92.29 per share on March 8, has climbed from a 52-week low of $67.64 per share. Cerner Corporation (NASDAQ:CERN) has a $15.89 billion market cap, and last reported EPS of $2.26. Given its market-leading position as a vendor to hospitals, I don’t think it’s peaked yet either.

OK, so maybe it hasn’t played its hand well of late, but Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) hasn’t lost all of its fans. In fact, the high-performing Vanguard Health Fund made Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) one of its biggest investments of the year in 2012, picking up 3.8 million shares at about $12 per share. (So far, the investment is still underwater; Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) closed at $11.22 per share on February 13, still in the ballpark, but not an improvement either.)

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) rose as high as $22 per share during the past 52 weeks, so there’s reason for hope for any investor that gets in now. The question is just how much hope, given the still-stormy seas Allscripts rides on these days. Let’s break it down.

In Allscripts’ favor:

* Steady growth: Over the past five years Allscripts has seen 14.8% annual revenue growth and 19.7% for EBITDA. Free cash flow has grown a striking 82.8 percent, which is nothing to sneeze at.

Strong market position: Despite some questionable moves (such as discontinuing its physician product abruptly) which lost it some respect, Allscripts remains on the shortlist when hospitals are buying, along with giants like Cerner Corporation (NASDAQ:CERN) and privately-held colossus Epic Systems.

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