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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-32085
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ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-4392754
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
2401 Commerce Drive
Libertyville, Illinois 60048
(Address of principal executive offices)
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(847) 680-3515
(Registrant's telephone number, including area code)
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Indicate by check ( X ) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of July 31, 2001, there were 38,006,531 shares of the Registrant's $0.01
par value common stock outstanding.
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ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
FORM 10-Q
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 2001 and December 31, 2000.............................. 1
Consolidated Statements of Operations for the three and six months ended June 30, 2001 and 2000. 2
Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2000........... 3
Notes to Consolidated Financial Statements...................................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................. 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................... 15
Item 2. Changes in Securities...................................................................... 15
Item 4. Submission of Matters to a Vote of Security Holders........................................ 15
Item 6. Exhibits and Reports on Form 8-K........................................................... 15
SIGNATURES......................................................................................... 16
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Effective January 8, 2001, Allscripts, Inc. acquired Channelhealth
Incorporated, and each became a wholly owned subsidiary of a new holding
company, Allscripts Healthcare Solutions, Inc., which was originally
incorporated in Delaware as Allscripts Holding, Inc. on July 11, 2000. As a
result of the merger transaction, each outstanding share of Allscripts, Inc.
common stock was converted into one share of Allscripts Healthcare Solutions,
Inc. common stock. Allscripts, Inc. no longer files reports with the Securities
and Exchange Commission, and its common stock is no longer listed on the Nasdaq
National Market; however, Allscripts Healthcare Solutions, Inc. does file
reports with the Securities and Exchange Commission, and its common stock is
listed on the Nasdaq National Market under the symbol "MDRX". In this report,
"we", "us", "our" and "Allscripts", when referring to events prior to January
8, 2001, refer to our wholly owned subsidiary and predecessor, Allscripts,
Inc., and, when referring to subsequent time periods, refer to Allscripts
Healthcare Solutions, Inc. and its wholly owned subsidiaries, Allscripts, Inc.
and Channelhealth Incorporated, unless the context indicates otherwise.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
June 30, December 31,
2001 2000
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents........................................................ $ 45,919 $ 76,513
Marketable securities............................................................ 5,975 20,663
Accounts receivable, net of allowances of $4,570 at June 30, 2001 and $4,384 at
December 31, 2000.............................................................. 18,137 13,850
Other receivables................................................................ 1,622 1,291
Inventories, net................................................................. 6,513 5,290
Prepaid expenses................................................................. 1,619 1,364
Other current assets............................................................. 32 360
--------- ---------
Total current assets......................................................... 79,817 119,331
Long-term marketable securities..................................................... 40,610 22,661
Fixed assets, net................................................................... 12,182 11,792
Intangible assets, net.............................................................. 381,192 149,690
Other assets........................................................................ 1,884 1,946
--------- ---------
Total assets................................................................. $ 515,685 $ 305,420
========= =========
LIABILITIES
Current liabilities:
Accounts payable................................................................. $ 6,170 $ 7,269
Accrued expenses................................................................. 2,517 2,546
Accrued compensation............................................................. 1,148 2,525
Deferred revenue................................................................. 2,440 1,877
--------- ---------
Total current liabilities.................................................... 12,275 14,217
Deferred taxes...................................................................... 44,170 --
Other non-current liabilities....................................................... 496 228
--------- ---------
Total liabilities............................................................ 56,941 14,445
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock:
Undesignated, $0.01 par value, 1,000,000 shares authorized, no shares issued and
outstanding at June 30, 2001 and December 31, 2000............................. -- --
Common stock:
$0.01 par value, 150,000,000 shares authorized, 38,031,832 shares issued,
37,997,367 shares outstanding at June 30, 2001; 29,138,619 shares issued,
29,104,154 shares outstanding at December 31, 2000............................. 380 291
0 and 278,646 shares to be issued pursuant to business combinations as of June
30, 2001 and December 31, 2000, respectively................................... -- 3
Additional paid-in capital.......................................................... 636,948 411,081
Unearned compensation............................................................... (850) (1,097)
Treasury stock at cost: 34,465 common shares at June 30, 2001 and December 31,
2000.............................................................................. (68) (68)
Accumulated deficit................................................................. (177,903) (119,375)
Accumulated other comprehensive income.............................................. 237 140
--------- ---------
Total stockholders' equity................................................... 458,744 290,975
--------- ---------
Total liabilities and stockholders' equity................................... $ 515,685 $ 305,420
========= =========
See the accompanying notes to the consolidated financial statements.
1
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
(Unaudited) (Unaudited)
Revenues:
Prepackaged medications................................. $ 12,719 $ 9,253 $ 25,282 $ 17,754
Software and related services........................... 6,400 2,863 10,436 4,009
-------- -------- -------- --------
Total revenues...................................... 19,119 12,116 35,718 21,763
Cost of revenue:
Prepackaged medications................................. 10,405 7,832 20,718 14,462
Software and related services........................... 6,409 1,660 11,684 2,627
-------- -------- -------- --------
Total cost of revenue............................... 16,814 9,492 32,402 17,089
Gross profit............................................... 2,305 2,624 3,316 4,674
Selling, general and administrative expenses............... 15,176 10,748 30,083 19,693
Amortization of intangibles................................ 18,628 5,443 36,416 6,017
Write-off of acquired in-process research and development.. -- 13,729 3,000 13,729
-------- -------- -------- --------
Loss from operations................................ (31,499) (27,296) (66,183) (34,765)
Interest income............................................ 1,335 2,295 3,114 3,505
Interest expense........................................... (68) (23) (198) (50)
Other income............................................... 255 -- 391 --
-------- -------- -------- --------
Loss from continuing operations before taxes ....... (29,977) (25,024) (62,876) (31,310)
Income tax benefit......................................... 2,249 -- 4,348 --
-------- -------- -------- --------
Loss from continuing operations..................... (27,728) (25,024) (58,528) (31,310)
Income from discontinued operations........................ -- -- -- 83
Gain from sale of discontinued operations.................. -- 193 -- 4,353
-------- -------- -------- --------
Net loss............................................ $(27,728) $(24,831) $(58,528) $(26,874)
======== ======== ======== ========
Per share data-basic and diluted:
Loss from continuing operations......................... $ (0.73) $ (0.90) $ (1.55) $ (1.19)
Income from discontinued operations..................... -- -- -- 0.00
Gain from sale of discontinued operations............... -- 0.01 -- 0.17
-------- -------- -------- --------
Net loss................................................ $ (0.73) $ (0.89) $ (1.55) $ (1.02)
======== ======== ======== ========
Weighted average shares of common stock outstanding used in
computing per share data-basic and diluted............... 37,993 27,931 37,659 26,432
======== ======== ======== ========
See the accompanying notes to the consolidated financial statements.
2
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
June 30,
------------------
2001 2000
-------- --------
(Unaudited)
Cash flows from operating activities:
Net loss............................................................................. $(58,528) $(26,874)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization.................................................... 43,568 7,210
Gain on sale of discontinued operations.......................................... -- (4,353)
Expense from issuance of equity instruments to non-employees..................... -- 742
Write off of acquired in-process research and development........................ 3,000 13,729
Non-cash compensation expense.................................................... 247 282
Deferred taxes................................................................... (4,348) --
Provision for doubtful accounts.................................................. 153 314
Realized gain on investments..................................................... (164) --
Changes in operating assets and liabilities, net of effects of acquisitions:
(Increase) in accounts receivable............................................. (3,631) (3,308)
(Increase) decrease in other receivables...................................... 3,797 (796)
(Increase) in inventories..................................................... (1,041) (570)
(Increase) decrease in prepaid expenses and other assets...................... 769 (935)
(Decrease) increase in accounts payable....................................... (1,099) 1,203
(Decrease) increase in accrued compensation................................... (1,582) 1,753
Increase in accrued expenses and deferred revenue............................. (44) 616
(Decrease) in other non-current liabilities................................... (50) --
-------- --------
Net cash used in operating activities..................................... (18,953) (10,987)
-------- --------
Cash flows from investing activities:
Capital expenditures................................................................. (3,392) (4,238)
Purchase of marketable securities.................................................... (28,186) (53,699)
Maturities of marketable securities.................................................. 25,251 12,924
Proceeds from sale of discontinued operations........................................ -- 4,353
Cash (used for) acquisitions, net of acquired cash................................... (5,337) (12,674)
Purchase of investment............................................................... -- (1,000)
-------- --------
Net cash used in investing activities..................................... (11,664) (54,334)
-------- --------
Cash flows from financing activities:
Proceeds from exercise of common stock options....................................... 23 570
Proceeds from public offering, net................................................... -- 99,743
Proceeds from issuance of common stock............................................... -- 10,000
Payments under line of credit........................................................ -- (2,251)
Payments of notes payable............................................................ -- (59)
-------- --------
Net cash provided by financing activities................................. 23 108,003
-------- --------
Net increase (decrease) in cash and cash equivalents.................................... (30,594) 42,682
Cash and cash equivalents, beginning of period.......................................... 76,513 40,561
-------- --------
Cash and cash equivalents, end of period................................................ $ 45,919 $ 83,243
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest............................................. $ 76 $ --
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock and options in acquisitions................................. $226,000 $169,000
See the accompanying notes to the consolidated financial statements.
3
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Summary of Significant Accounting Policies
The quarterly financial information presented herein should be read in
conjunction with Allscripts' audited financial statements and the accompanying
notes included in our Annual Report on Form 10-K. The unaudited interim
financial statements have been prepared on a basis consistent with those
financial statements and reflect all adjustments (all of which are of a normal
recurring nature, except those related to discontinued operations and business
combinations) that are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. The consolidated financial
statements include the accounts of Allscripts Healthcare Solutions, Inc. and
its wholly owned subsidiaries (collectively referred to as "Allscripts"). All
significant intercompany accounts and transactions have been eliminated in
consolidation. The results for the interim periods are not necessarily
indicative of the results to be expected for the year.
Discontinued Operations
In March 1999, Allscripts sold substantially all of the assets, excluding
cash and accounts receivable, of its pharmacy benefit management business. The
operating results of the pharmacy benefit management business have been
segregated from continuing operations and reported as a separate line item on
the Consolidated Statements of Operations under the caption "Income from
discontinued operations." Income from discontinued operations was $0 and
$83,000 for the six months ended June 30, 2001 and 2000, respectively. In the
first half of 2001 and 2000, Allscripts recognized a gain on the sale of this
business of $0 and $4,353,000, respectively, which has also been reported as a
separate line item on the Consolidated Statements of Operations under the
caption "Gain from sale of discontinued operations." The gain in the first half
of 2000 represents contingent consideration related to the sale.
Revenue recognition
As a result of the Channelhealth Incorporated ("Channelhealth") acquisition
in January 2001, Allscripts has begun to enter into contracts in which
Allscripts' services are essential to the functionality of the other elements
of the contract. For these contracts, revenue is recognized using the
percentage-of-completion method as services are performed or output milestones
are reached, as Allscripts delivers, configures and installs the software. The
percentage complete is measured by either the percentage of labor hours
incurred to date in relation to estimated total labor hours or consideration of
achievement of certain output milestones, depending on the specific nature of
each contract. Revenue from maintenance service is recognized ratably over the
term of the service contract. Maintenance fees billed in advance of providing
the related service are included in deferred revenue. Changes in job
performance, job conditions and estimated profitability may result in revisions
to revenue and are recognized in the period in which they are determined. As of
June 30, 2001, there was $284,000 of revenue earned on contracts in progress in
excess of billings and $538,000 of billings in excess of revenue earned on
contracts in progress.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133, as amended,
establishes methods of accounting for derivative financial statements and
hedging activities related to those instruments as well as other hedging
activities and became effective in the first quarter of 2001. We currently do
not invest in derivative investments nor do we engage in hedging activities.
Our adoption of SFAS No. 133 in the first quarter of 2001 did not have a
material effect on our financial position or results of operations.
4
Reclassifications
Certain reclassifications have been made in the prior period financial
statements to conform to the current period presentation.
2. Comprehensive Income (loss)
Comprehensive income (loss) includes all changes in stockholders' equity
during a period except those resulting from investments by owners and
distributions to owners. Comprehensive income (loss) for the three and six
month periods ended June 30, 2001 and 2000 consisted of the following (in
thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net loss........................................................... $(27,728) $(24,831) $(58,528) $(26,874)
-------- -------- -------- --------
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities arising during the
period net of taxes............................................. 16 -- 197 --
Less reclassification adjustment for gains included in income, net
of taxes........................................................ (18) -- (100) --
-------- -------- -------- --------
Other comprehensive income (loss).................................. (2) -- 97 --
-------- -------- -------- --------
Comprehensive loss................................................. $(27,730) $(24,831) $(58,431) $(26,874)
======== ======== ======== ========
3. Business Combinations
On January 8, 2001, Allscripts acquired Channelhealth in exchange for
8,592,996 shares of common stock with a fair value of approximately
$218,400,000 and the issuance of approximately 493,000 common stock options in
replacement of Channelhealth common stock options with a fair value of
approximately $7,600,000. Transaction costs incurred were approximately
$5,000,000. A deferred tax liability of $48,300,000, based on the tax effects
of non-goodwill intangibles related to the acquisition, has been recorded.
Allscripts will pay additional stock-based consideration if certain revenue
targets are achieved during 2002, which may result in the recording of
additional purchase price. The business combination was accounted for using the
purchase method of accounting and Channelhealth's results of operations have
been included in the consolidated financial statements subsequent to the date
of acquisition. Approximately $3,000,000 of the purchase price was allocated to
the value of acquired in-process research and development that had no
alternative future use and was charged to operations during the three months
ended March 31, 2001. Allscripts recorded approximately $5,000,000 of net
tangible assets in connection with the acquisition. In addition, approximately
$27,000,000 of the purchase price was allocated to acquired software and is
currently being amortized on a straight-line basis over five years, the
software's estimated useful life. Approximately $91,000,000 of the purchase
price was allocated to a strategic alliance agreement and is currently being
amortized on a straight-line basis over the term of the agreement, which is ten
years. Approximately $153,300,000 of the purchase price was allocated to
tradenames, goodwill, and assembled workforce and is currently being amortized
on a straight-line basis over five years. Goodwill represents the excess of the
purchase price over the fair market value of the net tangible assets acquired.
Upon adoption by Allscripts of SFAS 142, Goodwill and Other Intangible Assets,
these amounts will no longer be amortized but instead will be subject to
write-off or write-down based upon the results of impairment tests that will be
conducted by Allscripts with respect to these intangible assets no less
frequently than annually. Allscripts is required to adopt SFAS 142 effective
January 1, 2002. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Recently Issued Accounting
Pronouncements."
The income approach was the primary technique utilized in valuing the
purchased in-process research and development. The income approach focuses on
the income producing capability of the acquired assets and best represents the
present value of the future economic benefits expected to be derived from these
assets. The approach included, but was not limited to, an analysis of (i) the
expected cash flows attributable to the in-process
5
research and development projects; (ii) the risks associated with achieving
such cash flows; (iii) the completion costs for the projects, and (iv) the
stage of the completion of each project.
The following unaudited pro forma consolidated statements of operations for
the three and six months ended June 30, 2001 and 2000 assume the Channelhealth
acquisition had occurred on January 1 of each year after giving effect to
purchase accounting adjustments. These pro forma financial statements have been
prepared for comparative purposes only and do not purport to be indicative of
what Allscripts' operating results would have been had the acquisitions
actually taken place at the beginning of each of the periods presented, nor are
they necessarily indicative of future consolidated operating results.
The pro forma information below excludes the impact of non-recurring charges
related to an immediate expensing of acquired in-process research and
development. The pro forma weighted average shares include 8,592,996 shares
issued as consideration for the Channelhealth acquisition as if they had been
issued as of January 1 of each period presented.
Six Months Ended
June 30,
--------------------
2001 2000
-------- --------
(Unaudited)
(In thousands, excep
per share amounts)
Revenue.................................................... $ 35,718 $ 22,578
Loss from continuing operations............................ $(60,221) $(55,843)
Net loss................................................... $(60,221) $(51,407)
Per share data--basic and diluted:
Loss from continuing operations......................... $ (1.59) $ (1.59)
Net loss................................................ $ (1.59) $ (1.47)
Weighted average shares of common stock outstanding used in
computing basic and diluted loss per share............... 37,987 35,025
4. Net Income (Loss) Per Share
Allscripts accounts for net income (loss) per share in accordance with SFAS
No. 128, "Earnings per Share." SFAS No. 128 requires the presentation of
"basic" earnings per share and "diluted" earnings per share. Basic earnings per
share is computed by dividing the net income (loss) attributable to common
stockholders by the weighted average shares of outstanding common stock
(including shares to be issued pursuant to business combinations). For purposes
of calculating diluted earnings per share, the denominator includes both the
weighted average shares of common stock outstanding (including shares to be
issued pursuant to business combinations) and dilutive potential common stock.
In accordance with SFAS No. 128, basic and diluted net loss per share have
been computed using the weighted average number of shares of common stock
outstanding during the period. Allscripts has excluded the impact of all
outstanding warrants and options to purchase shares of common stock because all
such securities are antidilutive for all periods presented. Antidilutive
potential common stock excluded from the diluted earnings per share computation
consisted of 6,502,935 and 2,530,965 options and 7,737 and 29,467 warrants at
June 30, 2001 and 2000, respectively.
5. Contingencies
The pharmaceutical repackaging industry is subject to stringent federal and
state regulations. Allscripts' repackaging operations are regulated by the Food
and Drug Administration as if Allscripts were a manufacturer. Allscripts is
also subject to regulation by the Drug Enforcement Administration in connection
with the packaging and distribution of controlled substances.
6
Allscripts is a defendant in over 2,000 multi-defendant lawsuits brought by
over 3,000 claimants involving the manufacture and sale of dexfenfluramine,
fenfluramine and phentermine. The majority of these suits were filed in state
courts in Texas beginning in August 1999. The plaintiffs in these cases claim
injury as a result of ingesting a combination of these weight-loss drugs. In
each of these suits, Allscripts is one of many defendants, including
manufacturers and other distributors of these drugs. Allscripts does not
believe it has any significant liability incident to the distribution or
repackaging of these drugs, and it has tendered defense of these lawsuits to
its insurance carrier for handling. In addition, while Allscripts has not yet
conducted a review of all of the Texas suits, since physician dispensing is
generally prohibited in Texas and Allscripts has never distributed these drugs
in Texas, Allscripts believes that it is unlikely that it is responsible for
the distribution of the drugs at issue in many of these cases. The lawsuits are
in various stages of litigation, and it is too early to determine what, if any,
liability Allscripts will have with respect to the claims made in these
lawsuits. If Allscripts' insurance coverage in the amount of $16,000,000 per
occurrence and $17,000,000 per year in the aggregate is inadequate to satisfy
any resulting liability, Allscripts will have to defend these lawsuits and be
responsible for the damages, if any, that Allscripts suffers as a result of
these lawsuits. Allscripts does not believe that the outcome of these lawsuits
will have a material adverse effect on its financial condition, results of
operations or cash flows.
Between October and December 2000, four complaints were filed in the United
States District Court for the Northern District of Illinois against Allscripts
and its President and Chief Financial Officer, David B. Mullen. These
complaints, which purported to assert claims under Sections 10(b) and 20(a) of
the Securities Exchange Act on behalf of a purported class of persons who
purchased Allscripts' stock, were deemed related and consolidated for all
purposes before Judge Charles Kocoras, before whom the first filed case was
pending. The consolidated action was entitled In re Allscripts, Inc. Securities
Litigation, No. 00C6796 (N.D. Ill.) and included all consolidated cases:
Bredeson v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-6796 (N.D. Ill.,
filed on October 31, 2000), Karmazin v. Allscripts, Inc. and David B. Mullen,
Civ. No. 00C-6864 (N.D. Ill., filed on November 2, 2000), Mohr v. Allscripts,
Inc. and David B. Mullen, Civ. No. 00C-6922 (N.D. Ill., filed on November 6,
2000), Nadav v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-8126 (N.D.
Ill., filed on December 26, 2000).
In January 2001, Lead Plaintiff and Lead Counsel were appointed in the
consolidated case, and on March 12, 2001, plaintiffs filed a Consolidated and
Amended Class Action Complaint (the "Amended Complaint"). The Amended Complaint
named as defendants Allscripts, David B. Mullen, Glen E. Tullman, Allscripts'
Chairman of the Board and Chief Executive Officer, J. Peter Geerlofs,
Allscripts' Chief Medical Officer, and Philip J. Langley, formerly Allscripts'
Senior Vice President of Business Development/Field Services. The Amended
Complaint purported to have been brought on behalf of a class of all persons
who purchased the common stock of Allscripts between March 6, 2000 and February
27, 2001, and asserted claims under Section 10(b) and 20(a) of the Securities
Exchange Act based on Allscripts' restatement of its financial results for the
second quarter of 2000 and based on allegations relating to, inter alia, the
prospects for the TouchScript product.
Allscripts moved to dismiss the Amended Complaint, and on June 28, 2001,
Allscripts' motion was granted. On June 29, 2001 the Court entered judgment in
favor of all defendants, dismissing the case with prejudice. Plaintiffs did not
appeal the district court's dismissal of the case, rendering the district
court's judgment final in all respects.
In addition, Allscripts is from time to time subject to legal proceedings
and claims that arise in the normal course of its business. In the opinion of
management, the amount of ultimate liability with respect to these actions will
not have a material adverse effect on Allscripts' consolidated financial
condition, results of operations or cash flows.
6. Subsequent Events
In July 2001, Allscripts announced and began implementation of a
restructuring plan to realign its organization and reduce operating costs. As
part of this restructuring effort, Allscripts reviewed certain business
7
sectors and organizational relationships. This initiative was undertaken in
light of recent acquisitions and the commitment to focus sales and service
efforts on larger physician practices, academic medical centers, and integrated
delivery networks. As a result of this reduction, Allscripts anticipates that
it will take a restructuring related charge expected to be in the range of
$3,000,000 to $5,000,000 in its fiscal third quarter ending September 30, 2001.
Allscripts anticipates finalizing this plan and obtaining any necessary board
of directors' approval by the end of its third quarter ending September 30,
2001. Management expects to fully implement this plan within a six to nine
month period thereafter.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
We provide point-of-care medication management and physician decision
support solutions that focus on addressing the needs of physicians, managed
care payers and plans.
From our inception in 1986 through 1996, we focused almost exclusively on
the sale of prepackaged medications to physicians, in particular those with a
high percentage of fee-for-service patients. The advent of managed prescription
benefit programs required providers to obtain reimbursement for medications
dispensed from managed care organizations rather than directly from their
patients. This new reimbursement methodology made it more difficult for our
physician customers to dispense medications to their patient base.
In 1997, under the direction of our new executive management team, we
focused our efforts on the information aspects of medication management,
including the development of technology tools necessary for electronic
prescribing, routing of prescription information and submission of medication
claims for managed care reimbursement. In January 1998, we introduced the first
version of our TouchScript product that fully incorporated these features. At
the same time, we redirected our sales and marketing efforts away from our
traditional fee-for-service customer base to physicians who have a large
percentage of managed care patients. We recognized that there is a larger
market opportunity among physicians whose patients are covered by managed care
plans because the portion of prescriptions covered by managed care plans is
increasing relative to the portion of fee-for-service prescriptions. Further,
we believe that our technology can give us a competitive advantage where more
patients' prescriptions are covered by managed care plans because our products
streamline the process by which physicians, managed care organizations and
patients interact. In addition, we believe that the managed care market
provides us with the opportunity to realize higher margins on our software
products.
We believe that managed care prescription programs will continue to cover an
increasing percentage of patients in the foreseeable future. This trend will
have the effect of reducing the dispensing opportunities of our traditional
dispensing customers because of their inability to submit claims electronically
for reimbursement by managed care payers. This reduction in dispensing
opportunities will reduce the revenue that we have historically recognized from
these customers. Additionally, managed care programs impose reduced
reimbursement rates for the medications dispensed to their plan participants,
thus providing us with a dollar margin per prescription dispensed that is lower
than we have historically experienced. Because TouchScript enables physicians
to submit claims electronically for reimbursement by managed care payers, a
large portion of the medications dispensed by our TouchScript customers is
dispensed to managed care patients. Accordingly, we expect that the fastest
growing portion of our prepackaged medication business will provide margins
with respect to the sale of prepackaged medications that are lower than we have
historically experienced. In addition, we expect that seasonal variances in
demand for our products and services will continue. Historically, all other
factors aside, our sales of prepackaged medications have been highest in the
fall and winter months.
In addition to medication management, we believe that there are other
aspects of the physician's daily workflow that can be effectively addressed
through technology-focused solutions. We have enhanced and intend to continue
to enhance our current offerings by integrating new products and services that
address these needs. In furtherance of this strategy, in May 2000, we acquired
MasterChart, Inc., a software developer providing dictation, integration and
patient record technology, and Medifor, Inc., a provider of electronic patient
education. In connection with these acquisitions, we recorded goodwill and
other intangible assets of approximately $160,800,000, $4,600,000 of which is
currently being amortized over two years, and the balance of which is currently
being amortized over five years. In 2000, we completed another acquisition that
resulted in additional goodwill of approximately $10,800,000, which is
currently being amortized over two years.
In addition, on January 8, 2001, we acquired Channelhealth Incorporated, a
software developer providing modular software for physicians to access medical
information and manage clinical workflow. We recorded
9
goodwill and intangible assets of approximately $271,300,000, approximately
$91,000,000 of which is currently being amortized over ten years, and the
balance of which is currently being amortized over five years. Additional
stock-based consideration will be paid to the sellers of Channelhealth if
certain revenue targets are achieved during 2002. Those revenue targets, if
achieved, will result in the recording of additional purchase price at the time
that the targets are met. We also anticipate that additional cash will be
required to fund the ongoing operations of Channelhealth.
Upon our adoption of SFAS 142, these acquired intangible assets will no
longer be amortized but instead will be subject to write-off or write-down
based upon the results of impairment tests that we will conduct with respect to
these intangible assets no less frequently than annually. We are required to
adopt SFAS 142 effective January 1, 2002. See "--Recently Issued Accounting
Pronouncements."
We currently derive our revenue from the sale of prepackaged medications and
software and related services. Software and related services include revenue
from software licenses, computer hardware, electronic information, education
products, and related services.
Our shift in focus to physicians who desire technology-based clinical and
productivity solutions is reflected in the composition of our revenue, as
depicted in the following table (in thousands):
Quarter Ended
-------------------------------------------------------
2001 2000
------------------ ------------------------------------
March 31, June 30, March 31, June 30 Sept. 30, Dec. 31,
--------- -------- --------- ------- --------- --------
Prepackaged medications ....... $12,563 $12,719 $8,501 $ 9,253 $11,146 $12,667
Software and related services . 4,036 6,400 1,146 2,863 3,692 5,715
------- ------- ------ ------- ------- -------
Total revenue. ......... $16,599 $19,119 $9,647 $12,116 $14,838 $18,382
======= ======= ====== ======= ======= =======
Software and related services revenue for the fourth quarter of 2000
includes $1,500,000 for services provided to IMS Health Incorporated.
Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000
Total revenue for the three months ended June 30, 2001 increased by 57.8% or
$7,003,000 from $12,116,000 in 2000 to $19,119,000 in 2001. Prepackaged
medication revenue increased by 37.5% or $3,466,000 from $9,253,000 in the
second quarter of 2000 to $12,719,000 in the second quarter of 2001. Software
and related service revenue for the three months ended June 30, 2001 increased
by 123.5% or $3,537,000 from $2,863,000 in 2000 to $6,400,000 in 2001.
The increase in prepackaged medication revenue reflects an increase in the
volume of prepackaged medications sold and an increase in the dispensing of
drugs with higher average selling prices, as well as general price inflation.
The increase in software and related services revenue reflects revenue from the
sale of our content and clinical workflow, physician education, and dictation
and document management products resulting primarily from the Masterchart and
Channelhealth acquisitions, as well as higher revenue from our TouchScript and
patient education products.
Cost of revenue for the three months ended June 30, 2001 increased by 77.1%
or $7,322,000 from $9,492,000 in 2000 to $16,814,000 in 2001 due to increased
revenue from the sale of prepackaged medications, increased amortization
expense of acquired software, increased cost of implementation, training, and
support for all of our software and related services and increased depreciation
expense due to the increased number of
10
TouchScript system installations. For the three months ended June 30, 2001,
cost of revenue as a percentage of total revenue increased to 87.9% from 78.3%
in the prior year period principally due to increased amortization expense of
acquired software and increased depreciation expense due to the increased
number of TouchScript system installations, partially offset by a greater
percentage of medication revenue coming from higher margin generic medications
and a greater percentage of revenue coming from sales of higher margin software
and related services.
Selling, general and administrative expenses for the three months ended June
30, 2001 increased by 41.2% or $4,428,000 from $10,748,000 in 2000 to
$15,176,000 in 2001 due primarily to incremental selling and administrative
expenses related to Channelhealth, which was acquired in January 2001,
additional operating expenses related to Medifor and Masterchart, which were
acquired during May 2000, and additional spending for other general and
administrative expenses required to support increased revenue levels. Selling,
general and administrative expenses as a percentage of total revenue decreased
to 79.4% for the three months ended June 30, 2001 from 88.7% of total revenue
in the prior year period.
Amortization of intangibles for the three months ended June 30, 2001
increased $13,185,000 from $5,443,000 in 2000 to $18,628,000 in 2001. The
increase in amortization relates to the amortization of goodwill and other
intangibles recorded from acquisitions completed in May 2000 and in January
2001.
Write-off of acquired in-process research and development of $13,729,000 for
the three months ended June 30, 2000 relates to the Medifor and Masterchart
acquisitions completed in May 2000.
Net interest income for the three months ended June 30, 2001 was $1,267,000
as compared to $2,272,000 for the prior year period. The decrease relates to
the use of funds from our public offering in March 2000 for operations, capital
expenditures, and acquisitions.
Other income for the three months ended June 30, 2001 of $255,000 results
primarily from a reduction in the estimated accrual necessary for unredeemed
rebate obligations and realized gains on marketable securities.
We have recorded a benefit for income taxes during the three months ended
June 30, 2001 of $2,249,000 related to the amortization of non-goodwill
intangibles. No other provision or tax benefit for income taxes was computed
because we currently anticipate that annual income taxes due will be minimal or
zero, and we have provided a valuation allowance for our net deferred tax
assets.
Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000
Total revenue for the six months ended June 30, 2001 increased by 64.1% or
$13,955,000 from $21,763,000 in 2000 to $35,718,000 in 2001. Prepackaged
medication revenue increased by 42.4% or $7,528,000 from $17,754,000 in the
first half of 2000 to $25,282,000 in the first half of 2001. Software and
related service revenue for the six months ended June 30, 2001 increased by
160.3% or $6,427,000 from $4,009,000 in 2000 to $10,436,000 in 2001.
The increase in prepackaged medication revenue reflects an increase in the
volume of prepackaged medications sold and an increase in the dispensing of
drugs with higher average selling prices, as well as general price inflation.
The increase in software and related services revenue reflects revenue from the
sale of our content and clinical workflow, dictation and document management,
and physician education products resulting primarily from the Masterchart and
Channelhealth acquisitions, as well as higher revenue from our TouchScript and
patient education products.
Cost of revenue for the six months ended June 30, 2001 increased by 89.6% or
$15,313,000 from $17,089,000 in 2000 to $32,402,000 in 2001 due to increased
revenue from the sale of prepackaged medications, increased amortization
expense of acquired software, increased cost of implementation, training, and
support for
11
all of our software and related services and increased depreciation expense due
to the increased number of TouchScript system installations. For the six months
ended June 30, 2001, cost of revenue as a percentage of total revenue increased
to 90.7% from 78.5% in the prior year period principally due to increased
amortization expense of acquired software and increased depreciation expense
due to the increased number of TouchScript system installations, partially
offset by a greater percentage of medication revenue coming from higher margin
generic medications and by a greater percentage of revenue coming from sales of
higher margin software and related services.
Selling, general and administrative expenses for the six months ended June
30, 2001 increased by 52.8% or $10,390,000 from $19,693,000 in 2000 to
$30,083,000 in 2001 due primarily to incremental selling and administrative
expenses related to Channelhealth, which was acquired in January 2001,
additional operating expenses related to MasterChart and Medifor, which were
acquired during May 2000, and additional spending for other general and
administrative expenses to support increased revenue levels. Selling, general
and administrative expenses as a percentage of total revenue decreased to 84.2%
for the six months ended June 30, 2001 from 90.5% of total revenue in the prior
year period.
Amortization of intangibles for the six months ended June 30, 2001 increased
$30,399,000 from $6,017,000 in 2000 to $36,416,000 in 2001. The increase in
amortization relates to the amortization of goodwill and other intangibles
recorded from acquisitions completed in May 2000 and in January 2001.
Write-off of acquired in-process research and development of $3,000,000 for
the six months ended June 30, 2001 relates to the Channelhealth acquisition
completed in January 2001. For the six months ended June 30, 2000, we recorded
an expense for an immediate write-off of acquired in-process research and
development related to the Medifor and Masterchart acquisitions in the amount
of $13,729,000.
Net interest income for the six months ended June 30, 2001 was $2,916,000 as
compared to $3,455,000 for the prior year period. The decrease relates to the
use of funds from our public offering in March 2000 for operations, capital
expenditures, and acquisitions.
Other income for the six months ended June 30, 2001 of $391,000 results
primarily from a reduction in the estimated accrual necessary for unredeemed
rebate obligations and realized gains on marketable securities.
We have recorded a benefit for income taxes during the six months ended June
30, 2001 of $4,348,000 as it relates to the amortization of non-goodwill
intangibles. No other provision or tax benefit for income taxes was computed
because we currently anticipate the annual income taxes due will be minimal or
zero, and we have provided a valuation allowance for our net deferred tax
assets.
Liquidity and Capital Resources
At June 30, 2001, our principal sources of liquidity consisted of
$45,919,000 of cash and cash equivalents and $46,585,000 of marketable
securities. We issued securities for net cash proceeds totaling $99,743,000 in
2000. We have used these capital resources to fund operating losses, working
capital needs, capital expenditures, acquisitions and retirement of debt. At
June 30, 2001, we had an accumulated deficit of $177,903,000.
Net cash used in operating activities was $18,953,000 for the six months
ended June 30, 2001. Cash used in operating activities resulted primarily from
a loss from operations of $58,528,000, partially offset by depreciation and
amortization of $43,568,000 primarily related to amortization expenses as a
result of recent acquisitions. A non-cash charge of $3,000,000 was recorded due
to the write-off of in-process research and development costs related to the
Channelhealth acquisition. Deferred taxes decreased by $4,348,000 due to a tax
benefit recorded as it related to the amortization of non-goodwill intangibles
from acquisitions. Accounts receivable increased by $3,631,000 in the six
months ended June 30, 2001, primarily due to increased sales volume during the
quarter ended June 30, 2001. Other receivables decreased by $3,797,000
primarily due to a contract termination payment. Inventories increased by
$1,041,000 in the six months ended June 30, 2001 primarily due to
12
advance purchases of certain medications and computer equipment where shortages
were expected. Accounts payable decreased by $1,099,000 in the six months ended
June 30, 2001 primarily due to reduced capital expenditures during the quarter
ended June 30, 2001. Accrued compensation decreased $1,582,000 in the six
months ended June 30, 2001, primarily due to year-end commission and incentive
compensation accrued at December 31, 2000 and paid in the first quarter of
2001.
Net cash used in investing activities was $11,664,000 for the six months
ended June 30, 2001. Cash used in investing activities resulted primarily from
net purchases of marketable securities of $2,935,000, offset by net cash used
for acquisitions of $5,337,000. In addition, capital expenditures were
$3,392,000 for the six months ended June 30, 2001 as a result of expenditures
for TouchScript computer systems and capital outlays to support the future
growth of our business. Currently, we have no material commitments for capital
expenditures, although we anticipate ongoing capital expenditures in the
ordinary course of business.
Net cash provided by financing activities was $23,000 for the six months
ended June 30, 2001 as a result of proceeds from the exercise of common stock
options.
We believe that our existing cash, cash equivalents and marketable
securities will be sufficient to meet the anticipated cash needs of our current
business for at least the next twelve months. However, any projections of
future cash needs and cash flows are subject to substantial uncertainty. We
will, from time to time, consider the acquisition of, or investment in,
complementary businesses, products, services and technologies, which might
impact our liquidity requirements or cause us to issue additional equity or
debt securities. There can be no assurance that financing will be available in
the amounts or on terms acceptable to us, if at all.
Recently Issued Accounting Pronouncements
In July 2001, The Financial Accounting Standards Board ("FASB") issued
Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and
Other Intangible Assets. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement 141 also specifies criteria that intangible assets acquired in
a purchase method business combination must meet to be recognized and reported
apart from goodwill, noting that any purchase price allocable to an assembled
workforce may not be accounted for separately. Statement 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with estimable useful lives be amortized over their
respective estimated useful lives to their estimated residual values and
reviewed for impairment in accordance with FAS Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.
We are required to adopt the provisions of Statement 141 immediately and
Statement 142 effective January 1, 2002. Goodwill and intangible assets
acquired in business combinations completed before July 1, 2001 will continue
to be amortized and tested for impairment in accordance with the appropriate
pre-Statement 142 accounting requirements prior to the adoption of Statement
142.
Upon adoption of Statement 142, Statement 141 will require that we evaluate
our existing intangible assets and goodwill that were acquired in a prior
purchase business combination and make any necessary reclassifications in order
to conform with the new criteria in Statement 141 for recognition apart from
goodwill. Upon adoption of Statement 142, we will be required to reassess the
useful lives and residual values of all intangible assets acquired and make any
necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, we will be required to test the
intangible assets for impairment in accordance with the provisions of Statement
142 within the first interim period. Any impairment loss will be measured as of
the date of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period.
13
In connection with Statement 142's transitional goodwill impairment
evaluation, the Statement will require us to perform an assessment of whether
there is an indication that goodwill is impaired as of the date of adoption. To
accomplish this, we must identify our reporting units and determine the
carrying value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting units
as of the date of adoption. We will then have up to six months from the date of
adoption to determine the fair value of each reporting unit and compare it to
the reporting unit's carrying value amount. To the extent a reporting unit's
carrying amount exceeds its fair value, an indication exists that the reporting
unit's goodwill may be impaired and we must perform the second step of the
transitional impairment test. In the second step, we must compare the implied
fair value of the reporting unit's goodwill (determined by allocating the
reporting unit's fair value to all of its assets (recognized and unrecognized)
and liabilities in a manner similar to a purchase price allocation in
accordance with Statement 141) to its carrying amount, both of which would be
measured as of the date of adoption. This second step is required to be
completed as soon as possible, but no later than the end of the year of
adoption. We will recognize any transitional impairment loss as the cumulative
effect of a change in accounting principle in our statement of earnings.
As of the date of adoption, we expect to have unamortized goodwill of
approximately $213,000,000 and unamortized identifiable intangible assets of
approximately $127,000,000, all of which will be subject to the transition
provisions of Statements 141 and 142. Amortization expense related to goodwill
was approximately $29,000,000 and $20,400,000 for the six months ended June 30,
2001 and the twelve months ended December 31, 2000, respectively. Because of
the extensive effort needed to comply with adopting Statements 141 and 142, it
is not practicable to reasonably estimate the impact of adopting these
Statements on our financial statements at the date of this report, including
whether we will be required to recognize any transitional impairment losses as
the cumulative effect of a change in accounting principle.
Safe Harbor For Forward-Looking Statements
This report, including "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Notes to Consolidated Financial
Statements," and statements we or our representatives make may contain
forward-looking statements that involve risks and uncertainties. We develop
forward-looking statements by combining currently available information with
our beliefs and assumptions. These statements often contain words like believe,
expect, anticipate, intend, contemplate, seek, plan, estimate or similar
expressions. Forward-looking statements do not guarantee future performance.
Recognize these statements for what they are and do not rely upon them as
facts.
Forward-looking statements involve risks, uncertainties and assumptions,
including, but not limited to, those discussed in this report. We make these
statements under the protection afforded them by Section 21E of the Securities
Exchange Act of 1934. Because we cannot predict all of the risks and
uncertainties that may affect us, or control the ones we do predict, our actual
results may be materially different from the results we express in our
forward-looking statements.
For a more complete discussion of the risks, uncertainties and assumptions
that may affect us, see our Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2001, we did not own any derivative financial instruments but
we were exposed to market risks, primarily changes in U.S. interest rates. As
of June 30, 2001, we had cash, cash equivalents and marketable securities in
financial instruments of $92,504,000. Maturities range from less than one month
to approximately 12 years. Declines in interest rates over time will reduce our
interest income from our investments. Based upon our balance of cash, cash
equivalents and marketable securities as of June 30, 2001, a decrease in
interest rates of 1.0% would cause a corresponding decrease in our annual
interest income of approximately $925,000.
14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Between October and December 2000, four complaints were filed in the United
States District Court for the Northern District of Illinois against Allscripts
and its President and Chief Financial Officer, David B. Mullen. These
complaints, which purported to assert claims under Sections 10(b) and 20(a) of
the Securities Exchange Act on behalf of a purported class of persons who
purchased Allscripts' stock, were deemed related and consolidated for all
purposes before Judge Charles Kocoras, before whom the first filed case was
pending. The consolidated action was entitled In re Allscripts, Inc. Securities
Litigation, No. 00C6796 (N.D. Ill.) and included all consolidated cases:
Bredeson v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-6796 (N.D. Ill.,
filed on October 31, 2000), Karmazin v. Allscripts, Inc. and David B. Mullen,
Civ. No. 00C-6864 (N.D. Ill., filed on November 2, 2000), Mohr v. Allscripts,
Inc. and David B. Mullen, Civ. No. 00C-6922 (N.D. Ill., filed on November 6,
2000), Nadav v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-8126 (N.D.
Ill., filed on December 26, 2000).
In January 2001, Lead Plaintiff and Lead Counsel were appointed in the
consolidated case, and on March 12, 2001, plaintiffs filed a Consolidated and
Amended Class Action Complaint (the "Amended Complaint"). The Amended Complaint
named as defendants Allscripts, David B. Mullen, Glen E. Tullman, Allscripts'
Chairman of the Board and Chief Executive Officer, J. Peter Geerlofs,
Allscripts' Chief Medical Officer, and Philip J. Langley, formerly Allscripts'
Senior Vice President of Business Development/Field Services. The Amended
Complaint purported to have been brought on behalf of a class of all persons
who purchased the common stock of Allscripts between March 6, 2000 and February
27, 2001, and asserted claims under Section 10(b) and 20(a) of the Securities
Exchange Act based on Allscripts' restatement of its financial results for the
second quarter of 2000 and based on allegations relating to, inter alia, the
prospects for the TouchScript product.
Allscripts moved to dismiss the Amended Complaint, and on June 28, 2001,
Allscripts' motion was granted. On June 29, 2001 the Court entered judgment in
favor of all defendants, dismissing the case with prejudice. Plaintiffs did not
appeal the district court's dismissal of the case, rendering the district
court's judgment final in all respects.
Item 2. Changes in Securities
On April 30, 2001, Allscripts issued an aggregate of 819 shares of common
stock upon the cashless exercise of outstanding warrants in exchange for the
surrender of warrants to purchase an aggregate of 9,894 shares of common stock.
Exemption from registration is claimed under Sections 3(a)(9) and 4(2) of the
Securities Act.
Item 4. Submission of Matters to a Vote of Security Holders
At Allscripts' Annual Meeting of Stockholders held on April 30, 2001, the
stockholders elected Michael J. Kluger and David B. Mullen as directors of the
Company to hold office until the 2004 annual meeting of stockholders (subject
to the election and qualification of their successors or their earlier death,
resignation or removal). The votes were as follows:
Votes for Votes against Withheld/Abstain
---------- ------------- ----------------
Election of directors:
Michael J. Kluger..... 26,137,677 -- 41,293
David B. Mullen....... 25,777,895 -- 401,075
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits--See Index to Exhibits.
(b) Reports on Form 8-K--None.
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
(Registrant)
/S/ DAVID B. MULLEN
By: _________________________________
David B. Mullen
President and Chief Financial
Officer
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 14, 2001
16
Index to Exhibits
Exhibit
Number Description References
------ ----------- ----------
2.2 Agreement and Plan of Merger, dated as of March Incorporated herein by reference from the
13, 2000, among Allscripts, Inc., MC Acquisition Allscripts, Inc. Current Report on Form 8-K filed
Corp., MasterChart, Inc. and certain shareholders on May 24, 2000, as amended on July 24, 2000
of MasterChart, Inc., together with a list of and July 25, 2000
exhibits and schedules thereto. Such exhibits and
schedules are not filed, but the Registrant
undertakes to furnish a copy of any such exhibit or
schedule to the Securities and Exchange
Commission upon request.
2.3 Amendment No. 1 to Agreement and Plan of Incorporated herein by reference from the
Merger, dated as of May 9, 2000, by and among Allscripts, Inc. Current Report on Form 8-K filed
Allscripts Inc., MC Acquisition Corp., on May 24, 2000, as amended on July 24, 2000
MasterChart, Inc. and certain shareholders of and July 25, 2000
MasterChart, Inc.
2.4 Agreement and Plan of Merger, dated as of April Incorporated herein by reference from the
12, 2000, among Allscripts, Inc., WebDoc Allscripts, Inc. Current Report on Form 8-K filed
Acquisition Corp., Medifor, Inc. and certain on May 31, 2000, as amended on July 25, 2000
shareholders of Medifor, Inc., together with a list
of exhibits and schedules thereto. Such exhibits
and schedules are not filed, but the Registrant
undertakes to furnish a copy of any such exhibit or
schedule to the Securities and Exchange
Commission upon request.
2.5 Agreement and Plan of Merger, dated as of July Incorporated herein by reference from the
13, 2000, by and among Allscripts Holding, Inc., Allscripts, Inc. Current Report on Form 8-K filed
Allscripts, Inc., Bursar Acquisition, Inc., Bursar on July 27, 2000
Acquisition No. 2, Inc., IDX Systems Corporation
and Channelhealth Incorporated.
2.6 First Amendment to Agreement and Plan of Incorporated herein by reference from the
Merger, entered into as of November 29, 2000, by Allscripts Healthcare Solutions, Inc. Registration
and among Allscripts Holding, Inc., Allscripts, Statement on Form S-4 as part of Amendment No.
Inc., Bursar Acquisition, Inc., Bursar Acquisition 1 filed on December 7, 2000 (SEC file no. 333-
No. 2, Inc., IDX Systems Corporation and 49568)
Channelhealth Incorporated.
17