Allscript Misys Healtcar Solns (NASDAQ:MDRX)

Can a random number generator (www.random.org) produce the best 100 stock picks that will beat the market over the years? Let’s find out. :)

My process, for those interested:
I use www.random.org number generator to produce a number between 1 and 7,801. There are 7,801 stocks available to choose on the Motley Fool CAPS Game. Once I get a number, I go to the list, find that stock, and select that stock to outperform for the next five years.

It will take time for their new executive team to get the software act together, if they can.

Healthcare software with new management. New CEO comes from competitor Cerner (a $14.8b company compared to allscripts' $1.8b). new exec holds 356k shares

good company ( sell at $23,00) 300% return.

There is a lot of repair work that needs to be done. Four members of the board including the chairman resigned after extensive discussions regarding the leadership of the company. Some former execs fo Eclipsys had deep concerns on the company’s current direction. There are some operating problems, the integration of sunrise clinical manager and allscripts HER did not find favor with hospitals and delivery systems, and revisions are being made to meet their needs.

Unfairly punished. Not dead yet.

Joe Magyer tweet on 4/26/2012:

Allscripts ($MDRX) CFO, Chairman, and 3 other directors' quit today. Also, EBIT fell 43%. Otherwise, things are looking pretty rosy!

Good healthcare coverage with clinics, other outpatient providers

Due to new health care regulations, physicians need to be compliant with EMR standards by 2014 or face monetary penalties. Health systems need physicians to expand their networks so the two groups will help each-other. The health systems will provide the EMR infrastructure while the physicians will gain patients.

2011 Forbes Special Edition

Right now all boats are rising as hospitals rush to move towards Electronic Medical Records. Allscripts benefits from this industry wide momentum. However, within the industry they are a laggard. Please refer to the most recent KLAS report (KLAS is a VERY well respected Healthcare IT research company). http://www.klasresearch.com/News/PressRoom/2010/Top20

You will notice that a company called Epic earned the most top positions. The bad news is that Epic is private and always will be. The worse news is that there are 10 major players in the Healthcare IT industry. Last year Epic won roughly 50% of the sales, leaving 9 companies to divide up the remaining 50%.

As much as I want to invest in this industry, I can't rationalize it as long as Epic remains the private 800lb gorilla.

There is a small bright spot. Right now Epic does not work with medium or small hospitals (notice they only won the award for hospitals with 100 or more physicians).

Allscripts might grow in the next 2 years, however it will slowly crumble afterwards.

Raymond James Picks 2011

definite player in a relatively new game

Earnings will be above 0.18 analyst consensus for 3rd qtr.

must gain from digital medical record in next 5 years starting soon.

new PHR push

6/8 pick...

6/9 blog...

http://blogs.forbes.com/sciencebiz/2010/06/allscripts-eclipsys-merger-electronic-health-records-land-grab.html?partner=msn

this is fun and all, but I'm getting more than a little frustrated

This market has a lot of money on the table for them to compete for. They bought an ailing competitor at a steep price but they also bought their install base and a good shot a future add-on sales.

Looks like a winner

Macro:
Good sales; Growing with the healthcare industry; benefits from stimulus money; plenty of doctor's offices that have not yet upgraded -room to grow recurring revenue.

Fundamentals:
Minimal debt
Earnings growing relatively fast and price has not yet caught up.
Stalwart earnings history.

No stock is perfect, here are some the cons:
Cashflow is tight and spread out
Much of their assets are either intangible, or in receivables
PE is kinda high, even for a tech company (although earnings growth is pushing this down)
19% short interest