Veradigm Inc.

Greetings and welcome to Allscript's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jenny Gelinas. Thank you. You may begin.

Thank you very much. Good afternoon and welcome to the Allscript Third Corner 2022 Earnings Conference Call. Our speakers today are Rick Poulton, Allscript's Chief Executive Officer, Tom Langen, President and Chief Commercial Officer, and Leah Jones, our Chief Financial Officer. We will be making a number of forward-looking statements during the presentation and the Q&A part of the call. These statements are based on current expectations and involve a number of risks and uncertainties that could cause our actual results to vary materially. We undertake no obligation to revise these forward-looking statements in light of new information or future events. Please refer to our earnings release and SEC filings for more information regarding the risk factors that may affect our results. Please reference the GAAP and non-GAAP financial statements as well as the non-GAAP tables in our earnings release that are available on our investor relations website. And with that, I'm going to hand the call over to Rick.

Okay. Thanks, Jenny, and thanks, everybody, for joining us on our third quarter call today. Five weeks ago, we hosted our Investor Day in New York City. I know many of you were able to join us, either in person or virtually, and heard directly from key members of our leadership team our strategy for creating value across our three-sided network of providers, payers, and life sciences clients. For those of you who were unable to participate, I do encourage you to view the webcast, which can still be accessed on our investor relations website. Over the course of that presentation, we laid out our business strategies in great detail. So I'll keep my prepared remarks particularly brief today and just share a few thoughts on what I think investors and analysts should be focused on as they digest our third quarter results. First, our team executed fabulously during the quarter. Our business continues to generate meaningful top-line growth, 25-plus percent EBITDA margins, and free cash flow conversion year-to-date of more than 20 percent. In terms of momentum, both gross profit and adjusted EBITDA margins expanded meaningfully on a year-over-year basis as well as sequentially from the second quarter. And our $34 million of free cash flow during the quarter brought our year-to-date total over 90 million. As far as we know, the highest of any company in healthcare services with an enterprise value below $2.5 billion. We are proud of the fact that we laid out ambitious financial goals early this year, have maintained them all year long despite some bleak macroeconomic overhang, and are delivering results consistent with those goals through the first nine months of the year. We are generating these results atop a rock-solid balance sheet and have approximately $290 million of net cash as of quarter end. When I say approximately $290 million of net cash, obviously our gross cash on hand is considerably higher than that, but embedded in that figure is our assumption that we will pay off the principal of our outstanding convertible bonds in cash when they come due. Third, the new gap pronouncement that we recently adopted related to convertible bonds, it ignores this assumption about ultimately paying off the bonds in cash, and it results in a significant increase in diluted share count relative to basic share count compared to what we have previously reported. Users of our financial statements who are calculating common valuation metrics, such as enterprise value to EBITDA, must be careful to use the correct balances for cash and debt that correspond to the appropriate share count assumptions. We encourage financial statement users to review our non-GAAP presentation in Table 4 of the press release, where we reconcile to an average fully diluted share count for the quarter of 113.3 million shares, which, again, reflects our assumption of paying off the principal value of the bonds in cash when they come due. Actual fully diluted share count at quarter end is, of course, somewhat lower than the average due to our share repurchases that happen throughout the quarter. And then lastly, so considering all three of my points above, we believe that our stock currently trades at an unexplainable valuation discount to many of our peers in healthcare services. And as such, we expect to significantly increase our share repurchases in the fourth quarter compared to the levels we executed in Q3. So with that, let me turn the call over to Tom Langan, our president and chief commercial officer.