EX-99.1 2 dex991.htm INVESTOR PRESENTATION Investor Presentation
1
Investor Presentation
March 2011
Exhibit 99.1


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2010 Allscripts Healthcare Solutions, Inc.
A Connected Community of Health
2
Forward Looking Statements
This
presentation
contains
forward-looking
statements
within
the
meaning
of
the
federal
securities
laws.
Statements
regarding
future
events
or
developments,
our
future
performance,
as
well
as
management's
expectations,
beliefs,
intentions,
plans,
estimates
or
projections
relating
to
the
future
are
forward-looking
statements
within
the
meaning
of
these
laws.
These
forward-looking
statements
are
subject
to
a
number
of
risks
and
uncertainties,
some
of
which
are
outlined
below.
As
a
result,
no
assurances
can
be
given
that
any
of
the
events
anticipated
by
the
forward-looking
statements
will
transpire
or
occur,
or
if
any
of
them
do
so,
what
impact
they
will
have
on
our
results
of
operations
or
financial
condition.
Such
risks,
uncertainties
and
other
factors
include,
among
other
things:
the
risk
that
we
will
not
achieve
the
strategic
benefits
of
the
merger
(the
“Eclipsys
Merger”)
with
Eclipsys
Corporation
(“Eclipsys”);
the
possibility
that
the
expected
synergies
and
cost
savings
of
the
Eclipsys
Merger
will
not
be
realized,
or
will
not
be
realized
within
the
expected
time
period;
the
risk
that
our
business
will
not
be
integrated
successfully
with
the
business
of
Eclipsys;
disruption
from
the
Eclipsys
Merger
and
related
transactions
making
it
more
difficult
to
maintain
business
relationships
with
customers,
partners
and
others;
unexpected
requirements
to
achieve
interoperability
certification
pursuant
to
the
Health
Information
Technology
for
Economic
and
Clinical
Health
Act,
with
resulting
increases
in
development
and
other
costs
for
us;
the
volume
and
timing
of
systems
sales
and
installations,
the
length
of
sales
cycles
and
the
installation
process
and
the
possibility
that
our
products
will
not
achieve
or
sustain
market
acceptance;
the
timing,
cost
and
success
or
failure
of
new
product
and
service
introductions,
development
and
product
upgrade
releases;
competitive
pressures
including
product
offerings,
pricing
and
promotional
activities;
errors
or
similar
problems
in
our
software
products;
the
outcome
of
any
legal
proceeding
that
has
been
or
may
be
instituted
against
us
and
others;
compliance
obligations
under
existing
laws,
regulations
and
industry
initiatives
and
future
changes
in
laws
or
regulations
in
the
healthcare
industry,
including
possible
regulation
of
our
software
by
the
U.S.
Food
and
Drug
Administration;
the
possibility
of
product-related
liabilities;
our
ability
to
attract
and
retain
qualified
personnel;
the
implementation
and
speed
of
acceptance
of
the
electronic
record
provisions
of
the
American
Recovery
and
Reinvestment
Act
of
2009,
as
well
as
elements
of
the
Patient
Protection
and
Affordable
Care
Act
(aka
health
reform)
which
pertains
to
health
IT
adoption;
maintaining
our
intellectual
property
rights
and
litigation
involving
intellectual
property
rights;
legislative,
regulatory
and
economic
developments;
risks
related
to
third-party
suppliers
and
our
ability
to
obtain,
use
or
successfully
integrate
third-party
licensed
technology
and
breach
of
our
security
by
third
parties.
See
our
Annual
Report
on
Form 10-
K
for
the
transition
period
ended
December
31,
2010
and
other
public
filings
with
the
SEC
for
a
further
discussion
of
these
and
other
risks
and
uncertainties
applicable
to
our
business.
The
statements
herein
speak
only
as
of
their
date
and
we
undertake
no
duty
to
update
any
forward-looking
statement
whether
as
a
result
of
new
information,
future
events
or
changes
in
expectations.


3


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A Connected Community of Health
4
Allscripts Corporate Snapshot
Our Clients
>
180,000 Providers
50,000 Physician Practices
1,500 Hospitals
10,000 Post Acute Facilities
27,000 Clinicians In Patients’
Homes Every Day
Our Company
One Complete Set of Solutions
5,500 Employees
$1.3BB 2010 Non-GAAP Revenue
$148MM 2010 Non-GAAP Net
Income
>
Note:
Please
see
reconciliation
and
footnotes
in
appendix
to
this
presentation
regarding
non-GAAP
financial
measures.
Information
also
available
at
http://investor.allscripts.com
Allscripts Differentiates Itself Competitively With Leading Market Share Across Acute, Ambulatory
and Post-Acute Providers, a Key Consideration for Accountable Care Organizations


5


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Investment Highlights
Leading healthcare IT company with the broadest set of capabilities across every
venue of care including physicians, hospitals, post-acute and homecare
The most utilized clinical solutions enabling health care providers to fully capitalize
on the $30BB federal stimulus program
Leadership in technology and innovation uniquely positions Allscripts to
aggressively compete for the $43BB healthcare IT solutions market
A highly attractive financial profile
with high recurring revenue, significant
operating leverage and cost synergy opportunities and strong free cash flow
Proven
and
experienced
“industrial
strength”
management
team
>
>
>
>
>


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7
The Time is NOW
Quality Issues
Medical Errors / Safety
Concerns
Rising Cost
Significant Waste
A National
Problem
$43BB(1)
Opportunity
$30BB in Stimulus
Funding
~15% Penetration in
Physician Practices
Rise of the Employed
Physicians
Hospitals Driving
Adoption
A Market that
is Ready
We are at the
beginning
of
what
we
expect will be the
single fastest
transformation of any
industry in US history
A Significant
Opportunity
>
>
Source: McKinsey & Company


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Addressing the Entire Market Opportunity
Acute/Ambulatory EHR Opportunity 2010-2014 = ~$43BB
Source: McKinsey & Company
Ambulatory Stand-Alone
Opportunity
Acute Stand-Alone
Opportunity
Stand-Alone Market
Integrated Market
Integrated/Complete
Solution Across
Hospitals and
Physician Practices
$16BB
$10BB
$17BB
>
>
A Complete Portfolio Addresses the Entire Care Continuum
$45
$40
$35
$30
$25
$20
$15
$10
$5
$0


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9
Ambulatory Market Potential
Practice Size
Total # of Practices
EHR Penetration
(FY09/10)
1-3 Physicians
163,000
~13%
4-9 Physicians
27,000
~22%
10-25 Physicians
8,000
~33%
26+ Physicians
2,000
~50%
Total
200,000
~15%
Source: SK&A = SK&A Information Services which sells databases for sales and marketing success in healthcare industry


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10
December
2013
Incentive Program
Has Begun!
January
2011
ARRA
Announced
Q1
2009
Final Rules
Issued
July
2010
Increased Certainty for Widespread
EHR Adoption
Physician
Penetration
(1)
~20%
(1)
~20%
estimate
based
on
number
of
ambulatory
physicians;
penetration
as
a
percentage
of
number
of
physician
practices
is
~11%
(2)
Hospitals >200 beds
70% of Funding Used
Source: National Center for Health Statistics
~ 400 Hospitals
Will Replace Clinical
Systems
(2)
TODAY


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11
Allscripts: Competitive Differentiation
The Largest Network with a
Client Base of 180,000
Physicians, 1,500 Hospitals
and 10,000 Post Acute Care
Providers
The Unique Ability to Truly
Connect a Community
One Patient Record Across
an Organization and the
Community –
One Source of
Truth
One
Network.
The largest connected
network in the nation…
and in your community.
One
Platform.
Open, flexible, and
innovative to help you
connect inside and
outside your
organization.
One
Patient.
A complete portfolio
that delivers a single
patient record across
your community.
Comprehensive, Integrated
Solutions for all Settings
Rapid Implementation Approach
to Attain “Meaningful Use”
A Track Record of Innovation
with a ‘Future State’
Clinical/Financial Informatics
Capability
Common Microsoft platform and
a shared ‘open architecture’
approach, simplifying the
connection to third-party
applications across every care
setting


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12
Hospitals
Physician Practices
Post Acute Facilities &
Agencies
The ‘Hub’:
Over 1,500 Hospitals including 40%
of
“America’s
Best
Hospitals”
as
Clients
The ‘Spokes’:
Over 180,000 MDs and 10,000
Post Acute Care Organizations are Connected
to other Practices, Patients, Pharmacies, Payors,
Clinical Labs and Hospitals
One
Network:
The
Largest
Community
in
the
Nation


One Platform: A Complete, Integrated Solutions Portfolio
Clinical
Financial
Administrative
Analytics
Services
Community Exchange
Community Record
Helios
Remote Hosting
Patient Financials
EPSi
Enterprise Registration
Outsourcing
Enterprise Scheduling
Access Management
Consulting
Decision Support
Record Manager
Network/Desktop
Patient Flow
Financial Manager
Clinical Analytics
Pharmacy
Emergency Care
Laboratory
Knowledge-Based
Charting
Knowledge-Based
Medication
Administration
Acute Content
Clinical Manager
Radiology
Enterprise Identifier
Education
13


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One Patient: Critical Patient Data Flows Freely
Acute Solutions
(Sunrise)
Ambulatory
Solutions
Post Acute
Solutions
Patient Records
Labs
Prescriptions
X-Rays
Referrals
Results
Orders


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2010 Allscripts Healthcare Solutions, Inc.
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The New Architecture of Healthcare
Old World
(Monolithic Mainframe)
Hospitals
Owned Physician Practices
Rehab Clinics
New World
(Modern Platform)


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16
Proven Management Team
Executive
Position
Experience
Glen Tullman
CEO
30+ Yrs
Bill Davis
CFO
19+ Yrs
Lee Shapiro
President
30+ Yrs
Eileen McPartland
COO
25+ Yrs
Steve Lalonde
SVP Sales
20+ Yrs
Laurie McGraw
Chief Client Officer
20+ Yrs
John Gomez
President, Product Strategy &
Development
25+ Yrs
Diane Adams
EVP, Culture and Talent
20+ Yrs
Management team with a track record of operational execution, strong financial performance, integrating
acquisitions and driving shareholder value


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Board of Directors
Executive
Position
Philip M. Pead
Chairman
Dennis Chookaszian
Director
Eugene V. Fife
Director
Marcel L. Gamache
Director
Philip Green
Director
Edward Kangas
Director
Michael Kluger
Director
Glen Tullman
Director, CEO


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18
Financial Overview


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19
Fourth Quarter 2010 Financial Highlights
Achieving Results
Healthy Financial
Position
High Quality Growth
First Full Quarter of Consolidated Operations
Significant Cross Sales Across Ambulatory and Acute Solutions
University Hospitals; University of Kentucky; Maimonides, others
Sales Momentum Reflects Comprehensive Solutions, Ability to
Execute and Expanding Market Demand
Total Bookings of $288.2 million, ~34% over Q3 2010
Record Ambulatory Bookings Performance of $140.4 million
Acute Care Bookings of $147.8 million, or 31% growth in 2010
Non-GAAP Revenue Growth 10% y/y
Non-GAAP Operating Margin of 20.6% (vs. 19.1% Q3 2010)
Progress on Merger Related Cost Synergies
Free Cash Flow(1)
of ~$41MM
Repaid $81 million of Debt as of 12/31/10
(1) Free Cash Flow  equals cash flow from operations, after capital expenditures and capitalized software expenditures
Note: Please see reconciliation and footnotes in appendix to this presentation regarding non-GAAP financial measures.  Information also available at http://investor.allscripts.com


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Historical Consolidated Performance
Combined Non-GAAP Operating Income ($millions)
Combined Non-GAAP Operating Income ($millions)
Non-GAAP Revenue
CY 2009: $1,188MM
Non-GAAP Revenue
CY 2009: $1,188MM
Non-GAAP Revenue
CY 2010: $1,300MM
Non-GAAP Revenue
CY 2010: $1,300MM
$128
$0
$50
$100
$150
$200
$250
CY2009
CY2010
3 Months
12/31/09
$212
$251
$55
$69
3 Months
12/31/10
Ambulatory
56%
Acute
44%
Ambulatory
58%
Acute
42%
Note:  Ambulatory revenue refers to legacy Allscripts, as reported; Acute revenue refers to legacy Eclipsys, as reported
Please see reconciliation and footnotes in appendix to this presentation regarding non-GAAP financial measures.  Information also available at
http://investor.allscripts.com


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Significant Key Cost Synergies
Projected Cost Synergies Over Three Years
Duplicate management
structure
Duplicate public company
costs
Duplicate back-end office
and system integration
Marketing
Key Cost
Synergy Drivers
CY2011
~$25MM
~$35MM
~$40MM
CY2012
CY2013 &
Beyond


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Revenue Cross-Sell Opportunity of $1.25BB
Incremental Revenue Opportunity
$16BB Integrated Market Provides Additional Opportunity
Sunrise Clinical Manager,
Patient Flow, EPSi
Care Management, Emergency
Department, Homecare,
Ambulatory EHR
Sell
Ambulatory 
Solutions to
Acute Care
Base
Total
~$430MM
~$820MM
~$1,250MM
=
+
Sell Acute
Solutions to
Ambulatory
Care Base


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2010 Allscripts Healthcare Solutions, Inc.
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Non-GAAP
Revenue
Non-GAAP
Operating
Margin
Non-GAAP
Net Income
Non-GAAP Financial Outlook(1)
($ in millions; except per share amounts)
CY 2010 Actual
Non-GAAP
Diluted EPS
$1,300
19%
$148
$0.76
CY 2011
$1,425 -
$1,450
21%
$167 -
$176
$0.86 -
$0.90
2010 to 2011
Change
10 -
12%
13 -
19%
13 -
18%
--
(1) Guidance provided by the company in a press release on February  15, 2011. This presentation does not subsequently update or reaffirm Allscripts financial guidance.
Note:
Please
see
reconciliation
and
footnotes
in
appendix
to
this
presentation
regarding
non-GAAP
financial
measures.
Information
also
available
at
http://investor.allscripts.com


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2010 Allscripts Healthcare Solutions, Inc.
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24
Strong Free Cash Flow Generation
1
EBITDA is calculated as net income plus income tax expense, interest expense, stock-based compensation expense, depreciation & amortization, deferred revenue adjustments,
certain one-time and transaction-related expenses, and non-recurring losses on the sale of investments minus non-recurring gains on the sale of assets.
Note:
Please
see
reconciliation
and
footnotes
in
appendix
to
this
presentation
regarding
non-GAAP
financial
measures.
Information
also
available
at
http://investor.allscripts.com
Capitalization
Actual
12/31/2010
Cash and Marketable Securities
$131
Revolver ($250mm)
25
Term Loan
464
Total Debt
$489
Equity
1,384
Total Capitalization
$1,873
Credit Statistics
LTM EBITDA
(1)
$304
Total Debt / LTM EBITDA
(1)
1.6x
Debt / Capitalization
26.1%
Reduced debt by
$81MM since merger
closed
Required principal
payments in 2011
total $29.4MM
Borrowing costs
currently <4% with
approximately 60%
at a fixed rate


25


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26
GAAP
non-GAAP
revenue
and
net
income
reconciliation
for
the
twelve
months
ended
December
31,
2010.
Appendix: Non-GAAP Reconciliation
Non-GAAP
Total revenue, as reported
$1,191.5
     Deferred revenue adjustment
29.2
     Eclipsys results pre-merger period (7/1/10-8/23/10)
79.5
Total non-GAAP revenue
$1,300.3
Net income, as reported
$36.4
     Deferred revenue adjustment
17.7
     Acquisition-related amortization
27.7
     Stock-based compensation expense
16.9
     Transaction-related expense
38.2
     ARS Sales
0.9
     Tax rate alignment
6.8
     Eclipsys results pre-merger period (7/1/10-8/23/10)
2.9
Non-GAAP net income
$147.5
Allscripts Healthcare Solutions, Inc.
Non-GAAP Financial Information - 2010 Proforma Financial Information
(In millions)
(unaudited)
2010 Results


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GAAP –
non-GAAP revenue growth for the three months ended December 31, 2010.
Appendix: Non-GAAP Reconciliation
11/30/09
12/31/09
Q4 2009
Growth
12/31/10
Allscripts
Eclipsys
Total
y/y
Total revenue, as reported
$316.2
$169.3
$133.7
$303.0
4.4%
     Deferred revenue adjustment
20.9
               
1.4
2.0
3.4
Total non-GAAP revenue
$337.1
$170.7
$135.7
$306.4
10.0%
Allscripts Healthcare Solutions, Inc.
Condensed Non-GAAP Financial Information
(In millions)
(Unaudited)
Three Months
Ended
Three Months Ended


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GAAP –
non-GAAP operating margin reconciliation for the three months ended December 31, 2010 and
September 30, 2010.
Appendix: Non-GAAP Reconciliation
Three Months Ended
12/31/10
9/30/10
9/30/10
Q3 2010
Q4 2010
Allscripts
Eclipsys
Non-GAAP
Total revenue, as reported
$316.2
$191.2
$51.2
$242.4
Deferred revenue adjustment
20.9
0.5
6.7
7.2
Eclipsys results pre-merger period (7/1/10-8/23/10)
-
0.0
79.5
79.5
Total non-GAAP revenue
$337.1
$191.7
$137.4
$329.1
Operating income, as reported
$9.5
$5.5
($7.2)
($1.7)
Deferred revenue adjustment
20.9
0.5
6.7
7.2
Acquisition-related amortization
17.4
5.6
4.9
10.5
Stock-based compensation expense
3.7
6.6
0.0
6.6
Transaction-related expense
17.8
26.6
9.1
35.7
Restructuring
0.0
0.0
0.0
-
Eclipsys results pre-merger period (7/1/10-8/23/10)
-
0.0
4.7
4.7
Total non-GAAP operating income
$69.3
$44.8
$18.2
$63.0
Total non-GAAP operating income as a
percentage of non-GAAP Revenue
20.6%
-
-
19.1%
Allscripts Healthcare Solutions, Inc.
Condensed Non-GAAP Financial Information
(In millions)
(unaudited)
Three Months Ended


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29
GAAP
non-GAAP
revenue
reconciliation
for
the
twelve
months
ended
November
30,
2009
(Allscripts)
and
twelve months ended December 31, 2009 (Eclipsys).
Appendix: Non-GAAP Reconciliation
Allscripts
Eclipsys
Non-GAAP
Combined
Twelve Months Ended
November 30, 2009
December 31, 2009
Total revenue, as reported
661.1
                        
519.1
                             
1,180.2
         
Deferred revenue adjustment
9.7
                            
8.0
                                 
17.7
              
Elimination of prepackaged medications
(9.7)
                           
(9.7)
               
Total non-GAAP revenue
661.1
                        
527.1
                             
1,188.2
         


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GAAP –
non-GAAP operating income reconciliation for the three and twelve months ended December 31,
2009 (Eclipsys) and November 30, 2009 (Allscripts).
Appendix: Non-GAAP Reconciliation
2/28/09
3/31/09
Q1 2009
5/31/09
6/30/09
Q2 2009
8/31/09
9/30/09
Q3 2009
11/30/09
12/31/09
Q4 2009
11/30/09
12/31/09
CY 2009
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Operating income, as reported
$22.8
($0.1)
$22.7
$23.6
($2.2)
$21.4
$21.6
$4.5
$26.1
$26.7
$7.2
$33.9
$94.7
$9.4
$104.1
Deferred revenue adjustment (1)
3.1
1.5
4.6
2.6
3.1
5.7
2.6
0.5
3.1
1.4
1.8
3.2
9.7
6.9
16.6
Acquisition-related amortization (5)
6.1
3.1
9.2
5.7
3.1
8.8
5.7
3.1
8.8
5.7
3.1
8.8
23.2
12.4
35.6
Stock-based compensation expense (6)
2.1
4.4
6.5
2.6
6.8
9.4
3.3
3.6
6.9
4.4
3.4
7.8
12.4
18.2
30.6
Transaction-related expense (9)
3.5
0.0
3.5
7.2
0.0
7.2
3.9
0.0
3.9
1.3
0.0
1.3
15.9
0.0
15.9
Restructuring (10)
0.0
5.4
5.4
0.0
3.2
3.2
0.0
1.1
1.1
0.0
0.0
0.0
0.0
9.7
9.7
Elimination of prepackaged medications (12)
(1.0)
0.0
(1.0)
(0.1)
0.0
(0.1)
0.0
0.0
0.0
0.0
0.0
0.0
(1.1)
0.0
(1.1)
Total non-GAAP operating income (7)
$36.6
$14.3
$50.9
$41.6
$14.0
$55.6
$37.1
$12.8
$49.9
$39.5
$15.5
$55.0
$154.8
$56.6
$211.5
2009 Actual Results By Quarter
Three Months Ended
Three Months Ended
Three Months Ended
Three Months Ended
Twelve Months Ended
Allscripts Healthcare Solutions, Inc.
Non-GAAP Financial Information -
2009 Proforma Financial Information
(In millions)
(Unaudited)


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31
GAAP –
non-GAAP operating income reconciliation for the three and twelve months ended December 31,
2010.
Appendix: Non-GAAP Reconciliation
2/28/10
3/31/10
Q1 2010
5/31/10
6/30/10
Q2 2010
9/30/10
9/30/10
Q3 2010
12/31/10
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Allscripts
Eclipsys
Non-GAAP
Q4 2010
Non-GAAP
Operating income, as reported
$31.9
$10.7
$42.6
$24.5
$5.4
$29.9
$5.5
($7.2)
($1.7)
$9.5
$80.3
Deferred revenue adjustment
0.5
0.0
0.5
0.6
0.0
0.6
0.5
6.7
7.2
20.9
29.2
Acquisition-related amortization
5.6
3.1
8.7
5.7
3.1
8.8
5.6
4.9
10.5
17.4
45.4
Stock-based compensation expense
4.3
3.7
8.0
2.8
3.7
6.5
6.6
0.0
6.6
3.7
24.8
Transaction-related expense
0.0
0.0
0.0
9.1
3.5
12.6
26.6
9.1
35.7
17.8
66.1
Restructuring
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-
-
0.0
Eclipsys results pre-merger period (7/1/10-8/23/10)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4.7
4.7
-
4.7
Total non-GAAP operating income
$42.3
$17.5
$59.8
$42.7
$15.7
$58.4
$44.8
$18.2
$63.0
$69.3
$250.5
Three Months Ended
Three Months Ended
Three Months Ended
Three Months
Ended
2010 Full Year
Results
2010 Actual Results By Quarter
Allscripts Healthcare Solutions, Inc.
Non-GAAP Financial Information -
2010 Proforma Financial Information
(In millions)
(unaudited)


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32
GAAP –
non-GAAP EBITDA reconciliation for the 12 months ended December 31, 2010.
Appendix: Non-GAAP Reconciliation
Pro Forma Combined
12 months ended
12/31/2010
Net income
$25.9
Income tax expense
28.8
Stock-based compensation expense
35.7
Depreciation & amortization
99.9
Interest expense
11.1
Transaction related/restructuring expenses
67.1
Deferred revenue adjustment
29.1
Gain on Sale of Assets
-
                             
Loss on sale of investments/ARS
6.6
EBITDA
$304.3
 


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33
Financial guidance was last provided by the company in a press release on February 15, 2011. This presentation does not subsequently update or reaffirm
Allscripts financial guidance.
Allscripts non-GAAP guidance for calendar 2011 assumes the following adjustments to approximately $1,418.0 million in GAAP revenue: approximately $21.0
million, pre-tax in deferred revenue adjustments.  Non-GAAP guidance for calendar 2011 assumes the following adjustments to GAAP operating and net
income: approximately $70.0 million of acquisition-related amortization; approximately $40.0 million in stock-based compensation expense; approximately
$21.0 million in deferred revenue adjustments; all on a pre-tax basis.  Allscripts 2011 non-GAAP net income and diluted earnings per share guidance assumes a
38.0%-39.5% tax rate.
Footnotes Regarding Financial Guidance


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34
Allscripts reports its financial results in accordance with generally accepted accounting principles, or GAAP. To supplement this
information, Allscripts presents in this press release total non-GAAP revenue, gross profit, operating income and net income, including
non-GAAP net income on a per share basis, which are non-GAAP financial measures under Section 101 of Regulation G under the
Securities Exchange Act of 1934, as amended.
Total non-GAAP revenue consists of GAAP revenue as reported and Eclipsys revenue
for periods prior to the August 24, 2010 consummation of the 2010 Merger and adds back the acquisition related deferred revenue
adjustment booked for GAAP purposes.
Total non-GAAP gross profit consists of GAAP gross profit as reported and Eclipsys gross
profit for periods prior to the consummation of the 2010 Merger and adds back the acquisition related deferred revenue adjustment
booked for GAAP purposes.
Total non-GAAP operating income consists of GAAP operating income as reported and Eclipsys
operating income for periods prior to the consummation of the 2010 Merger and adds back the acquisition related deferred revenue
adjustment booked for GAAP purposes and excludes acquisition-related amortization, stock-based compensation expense and
transaction-related expenses. Non-GAAP net income consists of GAAP net income as reported and includes Eclipsys net income for
periods prior to the consummation of the 2010 Merger, excludes acquisition-related amortization, stock-based compensation expense
and transaction-related expenses, adds back the acquisition related deferred revenue adjustment, in each case net of any related tax
effects.
Management also believes that non-GAAP revenue, gross profit, operating income and net income and non-GAAP net income on a
per share basis provide useful supplemental information to management and investors regarding the underlying performance of the
company's business operations and facilitates comparisons of the
separate 2010 pre-merger results of legacy Allscripts and legacy
Eclipsys to that of the company's 2010 post-merger results.
Acquisition accounting adjustments made in accordance with GAAP can
make it difficult to make meaningful comparisons of the underlying operations of the business without considering the non-GAAP
adjustments that we have provided and discussed herein. Management also uses this information internally for forecasting and
budgeting as it believes that the measure is indicative of the company's core operating results. In addition, the company uses Non-
GAAP net income to measure achievement under the company's cash incentive compensation plans.
Note, however, that non-GAAP
revenue, gross profit and net income and non-GAAP net income on a per share basis are performance measures only, and they do not
provide any measure of the company's cash flow or liquidity. Non-GAAP financial measures are not in accordance with, or an
alternative for, measures of financial performance prepared in accordance with GAAP and may be different from non-GAAP
measures used by other companies. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with
Allscripts results of operations as determined in accordance with GAAP. Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures with GAAP financial measures contained within the attached condensed consolidated
financial statements.
Explanation of Non-GAAP Financial Measures