Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shareholders of health-care information technology provider Allscripts Healthcare Solutions (Nasdaq: MDRX ) may need medication for an upset stomach after their stock plunged as much as 44% earlier in the trading session following a dismal first-quarter earnings report.
So what: For the quarter, Allscripts reported a 9% rise in revenue to $365.5 million and a profit of $0.12 excluding one-time costs. These results missed Wall Street's estimates for a profit of $0.24 and $387.7 million by a mile. A 9% drop in booking revenue and a 64% leap in development costs were highlighted as the primary reasons for the weakness. I wish that were the end of it.
Allscripts also announced that three members of its board of directors, its long-serving CFO, and its board chairman were leaving the company. Add in at least two downgrades from Citigroup and UBS and you have the makings of a terrible day.
Now what: I'd like to tell you that today's huge move lower created a significant buying opportunity in the stock, but I can't help but be concerned by Allscripts' weakening sales trends, rising development costs, and especially the shake-up on the board. I'd consider breaking out the yellow caution tape until further investigation has been done around today's shareholder fleecing.
Craving more input? Start by adding Allscripts Healthcare Solutions to your free and personalized watchlist so you can keep up on the latest news with the company.