Allscripts Healthcare Solutions (MDRX) Q4 2016 Results - Earnings Call Transcript

| About: Allscripts Healthcare (MDRX)

Allscripts Healthcare Solutions, Inc. (NASDAQ:MDRX)

Q4 2016 Earnings Call

February 16, 2017 4:30 pm ET

Executives

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Analysts

Robert Patrick Jones - Goldman Sachs & Co.

George R. Hill - Deutsche Bank Securities, Inc.

Ross Muken - Evercore Group LLC

Eric Percher - Barclays Capital, Inc.

Michael Cherny - UBS Securities LLC

Jamie Stockton - Wells Fargo Securities LLC

Richard Collamer Close - Canaccord Genuity Group, Inc.

Matthew D. Gillmor, CFA - Robert W. Baird & Co., Inc.

Garen Sarafian - Citigroup Global Markets, Inc.

Mark Rosenblum - Morgan Stanley & Co. LLC

David M. Larsen - Leerink Swann & Co.

Eugene Mannheimer - Dougherty & Co. LLC

Jeff R. Garro - William Blair & Co. LLC

Sean W. Wieland - Piper Jaffray & Co.

Operator

Greetings and welcome to the Fourth Quarter and Full Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. The duration of the conference today will be one full hour. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Seth Frank, VP of Investor Relations. Thank you, Mr. Frank. You may begin.

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Thank you, Tim. Thanks and good afternoon, everyone. Welcome to Allscripts fourth quarter call. Our speakers today are Paul Black, Allscripts Chief Executive Officer; Rick Poulton, our President; and Melinda Whittington, our Chief Financial Officer.

We'll be making a number of forward-looking statements today 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 differ 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 detailed descriptions of the risk factors that may affect our results.

Also, as management reviews the fourth quarter details, please reference the GAAP and non-GAAP financial statements, as well as the non-GAAP tables in our earnings release and the supplemental data materials available on our website at www.allscripts.com.

With that, I'd like to turn the call over to Rick.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Okay. Thanks, Seth, and good afternoon, everybody. Thanks for joining us today, as we officially put a bow on 2016. While we had previewed our fourth quarter results back in January, I think you'll find today's discussion helpful to give you a much fuller appreciation of Allscripts market position and our momentum as we go into 2017. But before we get into a lot of details on the fourth quarter, I want to start with some perspective on 2016.

When we look at our financial results for 2016, and then look across our direct competitor set of public companies, we're proud to see that we are the only ones in the industry who grew double digits in each of bookings, revenue, and earnings, as well as expanded margins and generated a free cash flow yield of more than 5% of our equity value.

So, nobody other than Allscripts has posted such report card, and nobody other than Allscripts has delivered such balanced performance. And we've done this all while investing more than ever in our solutions. We're proud of the progress we've made and we're confident in the strategic approach that we're leveraging to take advantage of a multitude of natural growth opportunities.

So with that backdrop, as now is customary, I'll cover some business highlights for the quarter, Melinda will discuss the financials, and Paul will close with some additional perspective on 2016, as well as the current market environment.

As an overview, bookings totaled $406 million or 18% growth on a consolidated basis. This was an all-time quarterly record. Excluding Netsmart, standalone Allscripts bookings totaled $349 million, which is also above our previous record performance in 2015. The quality of our bookings remained strong and well represented across almost all of our portfolio. We had additional new Sunrise agreements, including three international wins, and we also saw a significant momentum in our suite of value-based care tools, as well as recurring managed services and in the post-acute market as bookings at Netsmart more than doubled from our Q3 levels.

Now, let's discuss the key markets starting with ambulatory. We had a strong quarter, both inside and outside the Allscripts client base. So notable agreements include the following. We expanded our relationship with Concentra, the leader in occupational medicine, urgent care, physical therapy, and wellness services with more than 300 medical centers in 40 states. Concentra is moving beyond our TouchWorks EHR to integrate Allscripts Practice Management solution to meet the unique needs of the workers' compensation and occupational medicine markets.

Additionally, we signed our second largest ambulatory market agreement ever with a multi-state, multi-group system with thousands of both employed and affiliated physicians. This organization was seeking a solution that would allow it to aggregate and share clinical data across its network, as well as disparate systems. In addition, Allscripts Revenue Cycle Management Services will be rolled out at this organization's own facilities and providers.

This deal builds on momentum we saw throughout 2016 for revenue cycle management services. Physician groups of all sizes are looking for turnkey solutions, built on a percentage of collections model to help them address changing reimbursement models and ever increasing regulatory demands. The third deal worth noting is an existing Allscripts TouchWorks client, one of the largest specialty and medical group organizations nationally – is expanding with us to include our CareInMotion platform.

This organization will also utilize our connectivity tools to enhance interoperability and care coordination across their network and in the communities they serve. Finally, in the employer onsite clinic segment of the market, we added a major national property and casualty insurance carrier, who will implement the Allscripts Professional EHR platform at their facilities in multiple locations.

This corporation also plans to expand to remote site based delivery, and this was a primary driver to choose Allscripts. The organization wanted a scalable solution that was clinically robust for use by both physicians as well as mid-level practitioners.

So, in summary for the ambulatory segment, we had a very good year in 2016. Combined with the Optum deal that we signed earlier this year, we executed the two largest footprint expansions in our history during the year.

In addition, we see great momentum with expansions to our relationships to revenue cycle services and value-based care tools. And finally, we saw a new submarket emerge in employer health as we cracked into retailing, financial services, IT services and now insurance verticals.

Moving to the domestic health systems and hospital market, we had a terrific quarter on all fronts. We added four new Sunrise hospitals including both new logos as well as new facilities with existing clients, and we also had several clients expand new modules to their current Sunrise platform or expand it to other Allscripts solutions.

One notable new win was a teaching hospital with approximately 250 beds and several specialty facilities in the South Texas area, which selected Allscripts after evaluating several other competitive options. Looking at Sunrise solution add-ons, we are seeing growing momentum in new and existing clients for Sunrise Financial Manager. This is Allscripts integrated enterprise revenue cycle platform.

Currently, we have five clients live on SFM and another 15 in various stages of implementation or under contract. For example, Atlantic General Hospital in coastal Maryland has been an Allscripts Sunrise partner for the past five years. In its third expansion since implementing Sunrise, Atlantic General will be consolidating multiple district clinical and financial systems to achieve a single-patient record across their enterprise. Portfolio additions include Sunrise Financial Manager, anesthesia systems, medical records and care coordination platforms.

Another significant client expansion in Q4 was with Coastal Community Health, a community system consisting of three health systems running from Georgia to St. Augustine, Florida. Baptist Health in Jacksonville, one of Coastal's three health systems, selected TouchWorks EHR as the single ambulatory solution to connect physician offices across its network. Part of this expansion includes moving several hundred physicians currently on multiple EHRs on to the Allscripts platform. They will also expand dbMotion as the connectivity backbone between Baptist and Coastal Community Health.

Interoperability remains top of mind for health system clients, and dbMotion remains the market leading solution for connecting disparate source systems. During the quarter, we drove approximately 85% growth year-over-year in dbMotion bookings in the domestic market.

Looking now to the international markets, Allscripts grew bookings strong double-digits in the fourth quarter. In late December, we announced that Dudley Group NHS Foundation Trust selected Sunrise and dbMotion to help it achieve its objectives to become a fully digital hospital. This trust has been a long-term user of the Allscripts Patient Administration System.

By adding Sunrise and dbMotion, the trust will create a community-aware EHR that can share harmonized patient information across care providers and to enable better informed, safer and more efficient care to its 450,000 patient population. Also in the fourth quarter, another trust, this one in the South of England, selected Sunrise to enable the delivery of high quality care to its patient population of almost 800,000. This trust is also implementing Allscripts Patient Administration System to support all aspects of patient management and care.

This is a significant win for us as this new client is one of the largest hospital trusts in all of the United Kingdom. We also had success in Q4 outside the UK with a new Sunrise agreement at Mount Alvernia Hospital in Singapore. This is a 335-bed general acute care institution with tertiary medical capabilities and two multi-disciplinary medical specialist centers. The addition of Mount Alvernia to the Allscripts family further solidifies our significant presence throughout Singapore as the leading healthcare IT provider in the country.

The international business is hitting on multiple cylinders, thanks to our strong client execution abroad. We see growth opportunities in these countries, plus Canada, Australia and others. We're excited to welcome Alan Fowles, a seasoned healthcare IT Executive, who recently joined us to lead our Allscripts efforts globally.

Finally, looking at the post-acute market, Netsmart had a great quarter, and we remain very excited about the growth opportunity and positioning across the continuum of post-acute medical and behavioral care. Bookings quality was strong and demand for Netsmart solutions and service offerings continue to be driven by the need from automation, care coordination, integration with health systems and ambulatory providers and new value-based payment models.

As an example, a new government funded initiative called Certified Community Behavioral Health Centers, similar to what you're – better known as Federally Qualified Health Centers, makes the need for Netsmart solutions a must-have versus a nice-to-have. Netsmart is the only provider that can meet all of the requirements of these CCBHCs with solutions that they own directly. As of January 1, pilot funding has been rolled out in eight states for the CCBHC initiative and one of Netsmart's key wins in the fourth quarter was in one of those states.

With the leading position in the behavioral health and human services market, plus entry in 2016 into the home care and long-term care markets, Netsmart is optimally positioned to be the leading platform that exclusively serves these community-based providers. As we shared in our investor deck in early January, collectively, this group of caregivers represents the second-largest spend in healthcare after the hospital systems market. So, our momentum is broad based and well positioned as we move into 2017.

And now, I'll turn the call over to Melinda to review the financials.

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Thanks, Rick. Good afternoon, everyone. I'll now go through Q4 2016 financial highlights and cover our outlook for 2017. For reference, please consult the tables in the back of the press release and the supplemental data workbook, which is available on the Investor Relations section of our website.

As a reminder, we closed the Netsmart transaction on April 9, 2016 and began consolidating the results as of that date. As such Q4 includes a full quarter contribution from Netsmart while the year includes approximately eight-and-a-half months' contribution. As promised, since the acquisition we are providing detailed perspective on Allscripts and the incremental Netsmart contribution through the end of 2016.

Heading into 2017, we'll focus on the results of the consolidated company, and we'll provide perspective on relative contribution from Netsmart where appropriate.

Moving to results, Rick covered the strong bookings. I would just point out that at 18% bookings growth including 7% from Allscripts standalone, we had a very strong performance, especially in light of 20% bookings growth in 2015. Consolidated bookings net was consistent on an annual basis between 2016 and 2015 with just over 50% software versus services. Total backlog has now increased to over $4 billion for the first time in Allscripts' history. Backlog on the heels of record bookings increased by nearly $130 million over Q3.

Turning to the income statement. Fourth quarter non-GAAP revenue increased 24% to $429 million, while GAAP revenue was $425 million. Fourth quarter revenue was within the guidance range we provided. Netsmart contributed $56 million in GAAP revenue and $60 million in non-GAAP revenue for the period. Thus, Allscripts' Q4 revenue, excluding incremental Netsmart increased 7% year-over-year.

Consistent with previous quarters, non-GAAP revenue excludes a $4 million acquisition-related deferred revenue adjustment and my comments will now focus on non-GAAP metrics, unless stated otherwise.

Looking at the consolidated results, software revenue in Q4 increased 25%, totaling $284 million. Excluding Netsmart, software revenue increased 8% versus year ago, strong growth. We also saw a solid acceleration sequentially for software revenue, both in Netsmart and Allscripts standalone.

The recurring portion of software revenue, consisting of subscriptions, recurring transactions, support and maintenance, increased 20%, and non-recurring software revenue increased a very strong 53% for the quarter.

Turning to client services, consolidated revenue grew 24% to $146 million in Q4. Excluding Netsmart, client services revenue increased 5% year-over-year. Recurring services revenue increased 32% year-over-year and excluding Netsmart, recurring services grew in the mid-teens.

As we've discussed previously, growth in recurring service revenue, including private cloud-based hosting and RCM services continues to be strong. Non-recurring services revenue increased 10% and excluding Netsmart, non-recurring services revenue experienced a high single-digit decline versus a year ago, but was flat with Q3.

We believe the bulk of the year-over-year declines in non-recurring services are now behind us. And in total, recurring revenue grew 23% and non-recurring revenue grew 28%. As a result, we are at a consolidated recurring revenue mix now of 76% in Q4.

For the year, we're at 77% recurring revenue mix and we continue to expect this percentage to migrate higher over time as the majority of our new bookings are derived from multi-year contracts.

Turning to gross margins, non-GAAP gross margin increased to 48.1%, an eight basis points year-over-year increase, also a very strong result. As noted previously, the addition of Netsmart did not materially impact gross margin percentages as margins are similar to Allscripts.

Software revenue margin for Q4 was 65.2% consistent with the fourth quarter a year ago and up quarter-to-quarter on the stronger Q4 software mix. Client services margins increased year-over-year by over 200 basis points to 14.8% on a non-GAAP basis, but declined sequentially versus Q3 based largely on mix of lower margin project-based services in Q4 consistent with normal variances we would have in revenue mix quarter-to-quarter.

We noted in Q3, we had been performing at the high end of our gross margin expectations for the year, so a slight pullback in Q4 was not unexpected. But stepping back and looking at the consolidated gross margin for the full year, we exceeded the 150 to 200 basis point margin expansion we expected in 2016.

Looking at expenses, non-GAAP SG&A totaled $99 million, a 32% increase year-over-year. The majority of the year-over-year increase was due to the addition of Netsmart, as well as several small acquisitions completed in Q4 of 2016, including HealthMEDX purchased by Netsmart, as well as Careport and Core Medical Systems in Australia on the Allscript side.

Quarter-to-quarter, non-GAAP operating expense increased $12 million on a consolidated basis due to the acquisitions noted previously as well as investments to support business growth. Looking to 2017, we expect consolidated operating results to remain at fourth quarter levels in early 2017, and then increase slightly later in the year to support business growth. Our outlook for 2017 incorporates the impact of this expense pattern for the year with the revenue growing meaningfully ahead of any expense growth on the year.

Gross R&D was $70 million, up 12% over last year's fourth quarter due primarily to increased investments and innovation for core Allscripts, as well as the addition of Netsmart and other small acquisition.

The consolidated software capitalization rate was 32%, an increase from 26% last year. As discussed in prior quarters, we expect to continue to see capitalization rates in the low 30s going forward. And as a result, R&D expense was $48 million, up slightly compared to prior periods.

Looking at consolidated adjusted EBITDA, which includes 100% of all consolidated entities, we delivered $84 million, a 29% year-over-year increase, and equivalent to a 20% adjusted EBITDA margin. Adjusted net EBITDA, which was Allscripts basis for EBITDA guidance in 2016 was $72 million, an 11% increase year-over-year, and within our guidance range for Q4.

Turning to interest expense, total cash interest expense on a consolidated basis increased to $16 million comparable to $4 million a year ago due mostly to the addition of Netsmart's non-recourse debt. Also note, we had a one-time $5 million bump in non-cash interest expense this quarter from the write-offs of unamortized debt acquisition costs in Netsmart for Q4.

Total consolidated debt on the balance sheet, including non-recourse debt for Netsmart was $1.3 billion. Excluding the Netsmart debt component, Allscripts' debt increased $54 million sequentially in Q4 due to share repurchase and the tuck-in acquisition.

Non-GAAP net income, excluding certain non-cash items, non-recurring expenses, and net of non-controlling interest, totaled $26 million. And non-GAAP EPS equaled $0.14 for the quarter within our guidance range.

Turning to cash on a full-year basis, operating cash flow totaled $269 million compared to $212 million in 2015, a 27% increase. The majority of the year-over-year improvement in operating cash flow was driven by Allscripts operation.

Free cash flow for 2016 totaled $131 million, which is equivalent to a strong free cash flow yield of approximately 6% at our current market cap. Allscripts continues to have a keen focus on maximizing cash flow, while also investing for the future growth.

We expect both operating and free cash flow to continue to grow double digits in 2017. This growth will be more heavily skewed towards the back-half of 2017 due to sequential business growth pacing, particularly in Netsmart and the timing of cash outflows.

In terms of share repurchase, in total we invested $121 million in share repurchases during 2016, buying back about 10 million shares or about 5% all Allscripts shares outstanding at an average price of $11.81.

And under our new authorization, implemented in November, we have approximately $176 million worth authorized for repurchase over the next three years. Our fully diluted average shares outstanding were 186 million for the fourth quarter.

And finally, turning to 2017, we are affirming our financial guidance for this year for our preliminary outlook provided in January. This includes non-GAAP revenue of between $1.71 billion and $1.74 billion. Adjusted EBITDA of between $345 million and $360 million consisting of Netsmart adjusted EBITDA between $90 million and $100 million including home care. And Allscripts, excluding Netsmart, adjusted EBITDA of between $255 million and $265 million. And finally, we expect non-GAAP earnings per share growth of between 10% to 15%.

Looking more closely at 2017, we expect a typical seasonal pattern where Q1 revenue will be down somewhat compared to Q4. Specifically, we expect to see non-recurring revenue for Q1 moving back to the $80 million to $90 million range, offset partially by continued growth in recurring revenue. We then expect revenue to strengthen each quarter consistent with historical trends and result in the 8% to 10% non-GAAP revenue growth we anticipate for the full fiscal year.

And now I'll turn it over to Paul.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Thanks, Melinda. Reflecting on 2016, I'd like to highlight many successes. Allscripts' all-time record bookings performance was the second time – year in a row that we have surpassed the $1 billion mark in sales.

As a reminder, when this team joined Allscripts, the company finished 2012 bookings of just $731 million. We're almost 2x that today. We have increased our win rate for new clients and are growing share.

For 2016, approximately 25% of sales came from new clients. The dollar bookings value of these new relationships almost tripled between 2014 and 2016. Driving this progress has been a major acceleration of investment in technology, continuing to strengthen our world class leadership and competitive position.

Total R&D investment has increased every single year over the past four. We've invested heavily to drive future growth and will continue to do so in 2017. We enhanced Sunrise to become a highly compelling alternative to other suppliers.

In 2016, we enjoyed the largest expansion of Sunrise facilities in our history, doubling the 2015 attainment, half of those coming from our global marketplace. In the ambulatory market, we partnered with large national organizations who will implement TouchWorks and Pro in physician groups across the country.

All in, we are getting more at bats than any time in the history of the company. We have significantly expanded four additional platforms for growth beyond the EHR that today are well aligned with the marketplace opportunities around the globe.

We've made major investments in key areas like interoperability and population health, establishing platforms to position Allscripts for these growth markets. We are leveraging Allscripts' unique position at the nexus of care delivery by forming partnerships with payers, pharmaceutical companies and others to build highly profitability new recurring revenue streams.

We invested to accelerate and overtake the competition with platforms like EPSi and maximize the value of critical, post-acute community assets like home care through Allscripts stake in Netsmart. We accelerated progress in highly strategic areas like precision medicine, specifically through the launch of 2bPrecise as a platform to bring genomic insights to the point of care.

This initiative has gained traction with early adopter agreements at the National Institute of Health and the Holston Medical Clinic. Allscripts rankings by industry analysts and research firms continues to improve with four years running of the number one ranking for acute EHR from Black Book, and number one ranking for population health management solutions.

With respect to the current U.S. market, there has been speculation about buying patterns due to the election and related concerns about the fate of the Affordable Care Act. On this point, I can provide Allscripts perspective. As of Q4, no pause is experienced. Thus far, we have not seen a discernible change in client buying patterns.

While clients are dealing with uncertainty, this is an industry that saves lives. Executives have businesses to run, waiting rooms full of patients to see and a bed census that needs attention. We support mission-critical solutions. Allscripts solutions are designed to deliver a high return on investment. We can apply scale to capabilities such as IT hosting, IT staffing and revenue cycle management. They become more impactful as organizations are looking to become more efficient.

Finally, we partner with clients and prospects for the long-term with SaaS-based pricing, allowing clients to preserve capital. Our SaaS-based pricing model aligns well with organizations who don't want to raise debt capital or tap into capital budgets to advance their strategic IT agenda.

Our strategy is to help clients prepare for the inevitable decline of fee-for-service medicine, replacing it with MACRA, value-based purchasing, alternative payment models, consumer engagement and precision medicine. I am confident that Allscripts is in the best position it has ever been in its history given the quality of the team, the excellence of our solutions and the breadth of offerings to maximize the opportunities we see in front us as we begin 2017.

We'll now take your questions.

Question-and-Answer Session

Operator

Thank you. At this time, we will be conducting a question-and-answer session. Due to a large portion of participants', we ask that you please limit yourself to one question initially and one follow-up question. One moment please while we poll for questions. Our first question comes from the line of Robert Jones of Goldman Sachs. Please proceed with your question.

Robert Patrick Jones - Goldman Sachs & Co.

Great. Thanks for the question. You guys highlighted the strength in the non-recurring software revenue in 4Q, big sequential jump in the quarter. Could you talk about, a little bit more specifically what drove the non-recurring software revenue, assuming it wasn't hardware just given that the margins were actually pretty good there too?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Yeah. So, by definition, the software revenue is pure software and it, kind of, overlaps with some of the overall strength we've seen across our solutions. The margins do tend to be good and Q4 does tend to be a pretty strong quarter for software overall.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

I mean Bob, some of it's coming off of some of the trends I talked about too. I mean we've seen Sunrise clients who are expanding some of their modules with them. So, it's not unusual to see a little spike in Q4 buying patterns. There's a little seasonality that comes with it. But we were I think fortunate to get some action around some of these – again modules and things like that.

Robert Patrick Jones - Goldman Sachs & Co.

Okay. Got it. And then, I guess just to follow up, was curious if you guys would be willing to share how much Optum contributed to the quarter from a revenue and bookings standpoint? And I guess just a general update on the Optum progress would be helpful?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

The relationship is great. I mean, we have a good cadence to meetings at the executive level as well as down at implementation levels. So, we remain very happy with that relationship, and very bullish that over the long-term it will be a material contributor to Allscripts.

But it is a long-term agreement, and so the short answer to, what was the impact to Q4, it's modest. I mean, this is going to be a operationalizing that will happen over years as we convert their physicians. So, it was a very modest impact in the quarter.

Robert Patrick Jones - Goldman Sachs & Co.

Great. Thanks, Rick.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Thanks, Bob.

Operator

Our next question comes from the line of George Hill of Deutsche Bank. Please proceed with your question.

George R. Hill - Deutsche Bank Securities, Inc.

Good afternoon, guys, and thanks for taking the question. Paul and Rick, you, kind of, highlighted broad-based strength in the product set in the quarter. I guess, if I'm thinking about 2017 and the bookings growth guidance and the revenue growth guidance. And I say, kind of, Paul against your comments on the backdrop of spend uncertainty. What are the buckets that we should we looking at that are going to be key to hitting the numbers in 2017? Is it the financial product? Is it ambulatory rev cycle? Is it core EMR, kind of, help us think about that?

And then my follow-up, I can just go right in with that is, like, how does the competitive environment change in those products versus the traditional EMR space?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

I'll take the first part and if somebody else wants to add a bit of it. I think, George, the pillars that we outlined in the discussion that we had at JPMorgan are really, kind of, the same thing that we're going to be talking about throughout the year.

Growth in global, growth in population health, growth in post acute through the Netsmart bookings and that business, our recurring services, outsourcing, hosting, optimization services will be a big thing when you think about folks that have installed a lot of software over the course of last three or four years, they're going to come back in before they expand additional things, they might want to optimize in some cases that which they already have deployed and then there is a fair amount of replacement market that's still out there, George, folks that have raised their hand and suppliers that have raised their hand and said, we're no longer going to be in this business. So, there's a number of growth markets for us. And quite frankly all of those seem to be playing to our strength today.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

All I'd add to that, George is that, again the momentum coming into the 2017, the message we'd like you to take away from this call is that it's broad-based, it's across the multiple segments we serve and the multiple clients that we serve both here in the U.S. and abroad and that strength is happening in all the areas Paul just categorized.

So, on top of that, all I would add to is, as we think – thought about our guidance for 2017, I'd point you back to our backlog, it's at an all-time record. And so, more than ever before, at least in our tenure, the guidance is driven by backlog as opposed to big assumptions of new sales activity.

George R. Hill - Deutsche Bank Securities, Inc.

No, good stuff. All right. I'll see you guys next week. Thanks.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Thanks, George.

Operator

Our next question comes from the line of Ross Muken of Evercore ISI. Please proceed with your question.

Ross Muken - Evercore Group LLC

Good afternoon, guys. You've done a lot on the new product side, you've been innovative, you've done some tuck-ins, talk a bit about where you're directing the R&D dollars and where you're most excited in terms of, maybe some of the nascent product launches or some of the newer market segments you've moved into?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

All these different solutions that we have require a fair amount of R&D that's just to say not only competitive, but also add new features and functions. When you think about mobility, you think about telemedicine, you think about areas in that regard based on the core, if you will, the chassis that we have operating each and every day.

But I think we've also demonstrated an entrepreneurial spirit here with regard to where we think healthcare is going and that's why we've made the investments in rest of the pop health platforms as well as the consumer platform, as well as the population health. So those are all areas that I would say we'll continue to feed and we'll continue to grow and expect that we get more and more pops out of that in 2017 and beyond.

Ross Muken - Evercore Group LLC

Great. Thanks, Paul.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

You're welcome. Thanks.

Operator

Our next question comes from the line of Eric Percher of Barclays. Please proceed with your question.

Eric Percher - Barclays Capital, Inc.

Thanks. I'd like to go back to the four pillars or I think you spoke to four new platforms for growth, Paul, and I recall you also talked about 25% of sales from new clients, could you, kind of, take each of those pillars and give us a feel for how much of the opportunity comes from selling to the existing base versus net new customer opportunities?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Well, I think, on the EMR side specifically when we talk about recurring services, those two combined to have a codependence on one another. So when you think about revenue cycle, you don't have to have an EMR installed. As a matter of fact, the deal that Rick talked about wasn't our electronic medical record as the core, when we did that deal down in Arizona. But when you think about outsourcing, hosting and optimization, those recurring services would be something that would be tied to our installed base.

But what we have been talking about and this is now our 10th year of proclaiming we're the open connected community health supplier, and we have opened APIs, our population health, our post-acute, those are all predicated – and our precision medicine, are all predicated on not having a Allscripts electronic medical record as a prerequisite for us being able to go layer those platforms in, in a large IDN or a large physician practice group. And certainly outside the United States, that's an area of growth for us as well.

Eric Percher - Barclays Capital, Inc.

That's helpful. And as a follow-up, Melinda, I think on the earlier question around the non-recurring revenue. I know during your commentary you said that the bulk of the decline is behind us, but then we talked a bit about the spike that can occur in Q4. Could you define bulk and how we should think about modeling that in the forward year?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Sure. Within recurring – non-recurring revenue, you've got both the software piece and then the services piece. The software has tended to be strong, but it will vary a lot by quarter, and Q4 tends to be a very strong quarter. This was a particularly strong Q4, and so we'll see that. And I would expect to see that drop-off in Q1. But over the year, I'd expect to see the non-recurring software still be a strong growth number.

On the services side of non-recurring, that's the piece that we've been challenged on a bit over time where that number has dropped off a bit as our business model has changed. We believe that has pretty much bottomed out. And so, we'll be back to certainly a flat, if not a growth pattern as we go into 2017. So, the net of all of that together, we had a quite strong Q4, but as I think about going into Q1, we'll be more into that 80 to 90 range a quarter again.

Eric Percher - Barclays Capital, Inc.

That's perfect. Thank you.

Operator

Our next question comes from the line of Michael Cherny of UBS. Please proceed with your question.

Michael Cherny - UBS Securities LLC

Good afternoon, guys. So, I want to take a big picture question, tying in a lot of things that you've mentioned together. Paul, you did reference...

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Did with lose Mike?

Operator

I believe so.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

All right. Maybe we could take the next question and we'll...

Operator

I apologize. Our next question comes from the line of Jamie Stockton of Wells Fargo. Please proceed with your question.

Jamie Stockton - Wells Fargo Securities LLC

Yeah. Thanks for taking my questions. I guess maybe the first one, Paul, your commentary about how you really haven't seen an impact from the election or anything stemming from that as far as the environment is concerned. Is that equally applicable to hospital CapEx spending trends, as well as interest in, kind of, moving forward with value based care or is that comment a little more geared toward hospital CapEx?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

My comments were specifically attributed to Q4, okay? Nobody knows yet what's going to happen with the Affordable Care Act and there's a lot of folks that are trying to get a read of the tea leaf and which unfortunately people don't seem to have a very good grasp.

The current thinking from what I'm gathering is that, something is going to happen late this year or the beginning of 2018, if it happens at all. So, from what I am seeing for folks thus far this year and the channel checks I've had with some of my large clients is that, they are saying we actually have a lot of work to go get it done.

For those who have capital, for those who have historically done well, this is not something that's causing them to make any adjustments so far in 2017. So, that's – the people that had been struggling with making money, those folks might have a different perspective on life, but ones that I've been talking to, have been saying that so far, they're not making any change.

Jamie Stockton - Wells Fargo Securities LLC

Okay. And then maybe just a quick one, Melinda. If I'm adjusting things correctly, the SG&A number looks like it ticked up a fair amount sequentially. And you may have commented on it, I just missed it, but could you give us some color on what drove that? Obviously, there was a strong software quarter, but was there anything else?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Yeah, sure. On SG&A, you're right, we had an uptick Q3 to Q4. The biggest driver on that was the tax on acquisitions that we've made in the year, so that's just as step change and those were obviously investments to continue to drive growth going forward, and so we'd expect that to stay.

Then beyond that was just small investments in continuing to grow the business, small uptick on development R&D expense and just smaller business investments overall. And we do expect to see that continue into 2017 based on the nature of those investments.

Jamie Stockton - Wells Fargo Securities LLC

Okay. Thank you.

Operator

Our next question comes from the line of Richard Close of Cannacord Genuity. Please proceed with your question.

Richard Collamer Close - Canaccord Genuity Group, Inc.

Great. Thank you. Congratulations on 2016. Just to hit, Melinda, on the margin side, I think you said relatively flat in the early part of the year, but expand in the back half. I think the guidance implies like 100 basis points. Do you think 100 basis point improvement is a good target if we look out over the next several years on an annual basis?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Yeah. I mean, right now, we're obviously focused on 2017 from a guidance range. And we had terrific margin expansion on gross margin in 2016, and we expect that we'll continue to see expansion but it'll be at a slower pace going forward. And then, relative to – we talked a little bit about where we are on OpEx. And as we growth that top-line, you'll see that expansion is referring too in the bottom-line.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Richard, are you staring at EBITDA margins – are you thinking about EBITDA margins?

Richard Collamer Close - Canaccord Genuity Group, Inc.

Yeah. EBITDA margins. And then – go ahead. Sorry.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

No. Yeah. I think lift that you're commenting on is right. We expect to continue to get leverage off of the operating expense space that we have. So we would expect EBITDA margins to continue to expand.

Richard Collamer Close - Canaccord Genuity Group, Inc.

Okay. And then, my follow-up is just a clarification. Did you guys actually state that you're expecting bookings growth in 2017 year-over-year?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

No. We don't guide bookings specifically.

Richard Collamer Close - Canaccord Genuity Group, Inc.

Okay. Thank you.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Thanks for the question.

Operator

Our next question comes from the line of Matthew Gillmor of Robert W. Baird. Please proceed with your question.

Matthew D. Gillmor, CFA - Robert W. Baird & Co., Inc.

Hey, thanks for taking my question. I'll just keep it to one. You've talked in the past about taking a portfolio approach to managing the business. And you've taken some actions on home health with the Netsmart JV and also with EPSi by bringing back some of the former management team. Are there other priorities as you think about portfolio search? Are there other assets within the company where you think you can unlock some value?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

I appreciate the way you framed that, Matt, because that is very much the way we're thinking about the business and behave in that way. I would add on to your list in addition to what we did with the home care business, what we did with EPSi, some of the tuck-in acquisitions we did are also meant to fuel the opportunity for other sub businesses that we have inside the company, Careport, for instance, really pairs up very well and very nicely with our care management solution.

So we've continued to invest, and we'll continue to think about that going forward. There are other assets that we think could work well as part of larger platforms, and we'll think about doing that both with organic activity as well as non-organic activity.

Matthew D. Gillmor, CFA - Robert W. Baird & Co., Inc.

Great. Thanks very much.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Sure.

Operator

Our next question comes from the line of Garen Sarafian of Citigroup. Please proceed with your question.

Garen Sarafian - Citigroup Global Markets, Inc.

Good afternoon, Paul, Rick and Melinda. Rick, maybe I'll ask my follow-up question first, which was just related to your last response. On cash flows you highlighted, it's fairly strong, and it's expected to grow for next year. So how does that change your capital deployment strategy? Does it start to weigh things a little bit differently versus inorganic growth or more share buybacks? And I guess – of course, this is for Melinda as well.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Well, I'll start and then Melinda can finish. I mean, I don't – nothing has changed about our capital deployment strategy. I think we've demonstrated a very good balance in our approach throughout 2016, and we've done that both with the actual cash we generated and we've used our balance sheet as well. So we've been an opportunistic buyer of our shares and we've also invested for the long term, and I think you should expect that behavior to continue as we look ahead.

Garen Sarafian - Citigroup Global Markets, Inc.

Okay. No material change then, that's great. And then on the revenue cycle side, you guys highlighted a very nice growth and some nice wins on the financial side of the product portfolio. But in the Q&A, the buckets of growth, it didn't sort of get repeated. So I think that was just to amplify the broad portfolio approach. But could you maybe elaborate a little bit more on the displacement opportunities on the revenue cycle side, and how does the next 12 months look like and the prior 12 months and sort of the baseball innings approach as to where you think you are, where the market is at?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Yeah. Sure, Garen. I mean, so let's just frame – make sure you have the right context for it. Paul spoke about how we think about growth going forward and along five pillars, and these are the same five pillars that we illustrated in our investor deck back in January. Recurring services is one of those pillars, so continuing to bring services as a wrapper to some of the technology offerings that we bring to our clients, is an area that we have experienced growth and we continue to experience growth.

One example of that is revenue cycle management services, and we're seeing a lot of traction in that, particularly with our ambulatory client base. We saw that throughout 2016. I mentioned a couple of deals in the fourth quarter. So the momentum continued throughout the year. And we expect it to continue to be an area that will bring us more success. I mean we have still a lot of white space with our client base. What's driving that is the complexity of the reimbursement model. And it's a big value add, pretty short-term ROI for clients when they elect us to do that. So, it's a good win-win.

Garen Sarafian - Citigroup Global Markets, Inc.

Got it. Great. Thank you, and see you next week.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

All right. Thanks.

Operator

Our next question comes from the line of Michael Cherny of UBS. Please proceed with the question.

Michael Cherny - UBS Securities LLC

Okay. I'm going to try this again. Can you guys hear me?

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Yeah.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Welcome back, Mike.

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Pay your bills.

Michael Cherny - UBS Securities LLC

Thank you. Must be the end of earning season that I think my phone is crapping out on me. Paul, you mentioned before the data point about when you joined, bookings were half of what they are now. As you think about the evolution of the conversations you're having, I know in the early days you were spending a ton of time on the road, probably more than you liked in terms of – in front of customers and talking with them and back then it was much more of a defensive sales pitch.

Now as you go on the offensive, how has that evolution of the sales process changed? How has that changed the energy that your sales force has? And I guess what are the toolkits as you think about all the various different products portfolio approach you take that they have in their playbook now that they didn't really have four years ago in terms of the drastic differences they're seeing?

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Well, I always like speaking to clients, Michael, as you know. And I still spend a fair amount of my time doing that. I think it's important to stay close to the folks that are paying the bills to understand what they're thinking about and also to make sure that our messaging is resonating well with them, and in some cases, obviously, they're working on stuff that are important to us that we should be thinking about as well.

So, when I think about being where we were back in 2012, I think we find ourselves sitting here in 2017 in completely different position. Back then, we had a bunch of different electronic medical record systems that were out there, that were great, that we were installing and that we were optimizing, and that we were, if you will, enhancing so that's where a bunch of the money went. Since that time, we offered to our clients and to shareholders as a result of that, this platform approach around population health management, around consumer and around precision medicine.

And I think all of those have been very important and strategic platforms for us, not only to distinguish ourselves in the marketplace, but also give the sales reps more stuff to go sell. We also as a result of the open approach with our APIs, we have a lot of organizations that may have been incubated in that arena that we'd be either partnered with, purchased or have resold some of their capabilities in addition to ours to be able to give – answer your question about what the sales guy do today that he couldn't do back then.

We give them a lot more solutions to go out and sell to an existing client. It also makes us more competitive, when you're competing head-to-head against somebody else. Whereas in 2012, we may have had a shortage of some solutions that were very important in order to round out a complete 10-year look, if you were client of – where we were back then versus today. And if they're making a new 10-year decision, what are all they looking for?

And so, that's part of my, if you will, comment towards the end of – I feel great about where we are in 2017. We're never perfect, we're never completely finished. But had we not made those investments during that period of time, during the course of the last four years, we would be being left in the dust today, which I think a lot of people who have not made those investments will be by us and by others as we look forward.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

I'd like to just add to that too, Mike, if you don't mind just because I think our sales force is one of the greatest assets we have at the company. Though selling environment's gotten a lot tougher, it's not just about – you're not selling regulatory compliance anymore, you're selling return on investment and you got to bring value to these clients. And so, our guys have had to evolve. I think they've done that in a magnificent way. We've equipped them with some education. We've equipped them with, I think, a better financial profile for the company. I mean that was tough to fight against four years ago. I think there were a lot of question marks about the company, so that's made it easier. And we've equipped them, I think, with much better solution set, as Paul just referred to, but the team has had to really reinvent themselves and they've done a wonderful job.

Michael Cherny - UBS Securities LLC

Thanks for the color, guys. Appreciate it.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Thanks, Mike.

Operator

Our next question comes from the line of Ricky Goldwasser of Morgan Stanley. Please proceed with your question.

Mark Rosenblum - Morgan Stanley & Co. LLC

Hi. This is Mark Rosenblum on for Ricky. In the quarter for your bookings number, what percentage was from international versus U.S.? And then following up on that, I know you've seen pretty strong growth in that market, when we think about international, is there opportunity replacement or is there additional penetration to take advantage of there?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

So, look, we don't give specific breakout of U.S. versus international and we're not going to start now. But I think I would point back to my comments earlier, international is still a small piece of the overall puzzle of Allscripts, but it's a piece that's growing quite rapidly. And as I said earlier, we had double-digit growth year-over-year in the quarter in our international bookings. So, we feel pretty strongly about its contribution.

What was the second part of your question? I'm sorry, could you repeat that?

Mark Rosenblum - Morgan Stanley & Co. LLC

Sure. And then, in terms of the opportunity, is it mostly replacement market or is the penetration lower than in the U.S?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

No, this is largely about initial adoption. I think generally speaking, this is a general statement, the outside-the-U.S. is certainly behind the U.S. in terms of adoption of digital tools to manage clinical care. So a lot of times, we are replacing paper in many of the new things that we're doing. So it's much more of a greenfield opportunity than we see here in the U.S.

Mark Rosenblum - Morgan Stanley & Co. LLC

Great. Thank you.

Operator

Our next question comes from the line of David Larsen of Leerink Swann. Please proceed with your question.

David M. Larsen - Leerink Swann & Co.

Hi, guys. Congrats on a very good quarter. I think Netsmart was described as being a must-have solution. Could you say that there were sort of new government mandates that would require like some post-acute facilities to deploy a Netsmart type of solution? Can you just repeat that, please, or expand on that?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Yeah. Sorry, I don't want any confusion there. What I was describing, Dave, is there's a new government funded initiative, it's called Certified Community Behavioral Health Centers, so the acronym for that CCBHC. And as of January, there's actually pilot funding that's been rolled out for that. As part of that initiative, you have to have access to digital tools that – like what Netsmart is offering.

So we described that – the phrase I used there that, with that new program, these solutions become really a must-have rather than a nice-to-have. Outside of that program, Netsmart is enjoying turning a lot of non-digital solutions paper, et cetera, into digital solutions but it's not based on our requirements, it's based on more of an ROI. Under this program, it really becomes a must have. So, that was the distinction we're trying to draw.

David M. Larsen - Leerink Swann & Co.

Great. And then in terms of the number of hospital win, did you disclose how many hospitals you actually won in 2016 and would you expect that number to increase in 2017? Thanks.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

We didn't do a total for the full year, Dave, but it was our best year certainly in the last five years and maybe the best year ever. We're still trying to go through some of the history books on that. But it was our best year ever in terms of new hospital footprint sold. And yeah, as we go into 2017, we are expecting that to be even higher.

David M. Larsen - Leerink Swann & Co.

Okay. And then just one last. I hear projected rate for 2017 for revenue is around 9%. So, would that be like 9% for base Allscripts and also 9% for Netsmart, roughly speaking?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Consolidated.

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

9% on the consolidated.

David M. Larsen - Leerink Swann & Co.

Okay. All right. And any sense for how much you expect legacy Allscripts to grow organically on its own or...?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

Yeah. We're not breaking out the pieces individually, but I can tell you that we've talked for a long time about seeing Allscripts core business get up to that mid single-digit kind of growth rate and which we did in Q4, and we expect to see that next year- or 2017, now this year.

David M. Larsen - Leerink Swann & Co.

Okay, great. Thanks, and congrats on a good quarter.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

Thanks, Dave.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Thanks, Dave.

Operator

Our next question comes from the line of Gene Mannheimer of Dougherty & Company. Please proceed with your question.

Eugene Mannheimer - Dougherty & Co. LLC

Hey, thanks. Good afternoon, and congratulations on a good finish to 2016.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Thank you, Gene.

Eugene Mannheimer - Dougherty & Co. LLC

I would call that there were some Netsmart bookings last quarter that slipped. So, I presume that they landed in the fourth quarter. Is it possible for you to quantify that for us?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

I just acknowledged, Gene, we did talk about that in the context of Q3, on our Q3 call. We had – we felt were somewhat weak numbers at Netsmart and we did talk about that partially as being deals have slipped. (57:24) We definitely picked up some of those deals in Q4, but I would stop short of saying, we think Q4 was an artificially high quarter for Netsmart. It was solid quarter. You will always have deals that slip. All right? That will always be a story, particularly when you talk to sales forces. But we definitely think part of why you saw such a massive change in Q3, Q4 with respect to the Netsmart contribution wasn't part because they picked up that. And don't forget, seasonality is always going to drive some of this too. Buying patterns still tend to be stronger in Q4 than they do the rest of the year.

Eugene Mannheimer - Dougherty & Co. LLC

Got you. Understood. Thanks, Rick. And then, Paul, you called out the replacement market opportunity earlier is pretty active still. Can you give us some more color around whether that skewed toward ambulatory or acute care or both? And within acute care, would it be geared towards small and mid-sized customers or academics as well? Thank you.

Paul M. Black - Allscripts Healthcare Solutions, Inc.

I think it's – from what we're seeing and talking to some of the pundits that are out there, both, I just look at the backlog, or if you will, the pipeline, we've gone through our Q1 planning and what's out there for that, as well as talking to some of the folks that we talk to on a regular basis as to what they're being asked for regarding the consulting work that they do for organizations that are thinking about doing a new system selection.

It's probably 50-50 between large hospitals, medium-sized hospitals on the acute care side. And then on the ambulatory side, there is an interestingly robust set of activities in that regard as well. In some cases, as I said earlier, it's because people are saying I'm not going to be as aggressive on my R&D spend, and in other cases, they were raising their hands and said I'm not going to really be callable for ongoing government regulations whether it's macro or some of these other things that are out there that are requirements in 2017 and 2018.

Eugene Mannheimer - Dougherty & Co. LLC

Okay. Thank you.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Thanks, Gene.

Operator

Our last question comes from the line of Jeff Garro of William Blair. Please proceed with your question, Jeff. Jeff, you're in the queue, please proceed with your question.

Jeff R. Garro - William Blair & Co. LLC

Yeah. Thanks for squeezing me in.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Sure.

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Hey, Jeff.

Operator

Jeff?

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

We're here. Go ahead, Jeff. Did we lose him?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Jeff? Tim.

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Tim, anyone?

Operator

Yes, I'm here.

Seth R. Frank - Allscripts Healthcare Solutions, Inc.

Okay. If we've lost him, then actually just – I guess we'll need to conclude.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Do you have anyone else, Tim, in queue or no? Is that it?

Operator

Yes, we have one more question from the line of Sean Wieland of Piper Jaffray. Please proceed with your question.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

All right, Sean.

Sean W. Wieland - Piper Jaffray & Co.

Thanks for squeezing me. And I hope my phone is working. Hey, just a quick one for you. What do you anticipate these acquisitions contributing in 2017? How is that baked into your guidance?

Melinda D. Whittington - Allscripts Healthcare Solutions, Inc.

They are baked in, but they're minimal relative to the overall growth, importantly as we said even with those, that core Allscripts business is in a – produce in the mid single-digits.

Sean W. Wieland - Piper Jaffray & Co.

Okay.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Sean, just to be clear, you're talking about the ones we did in Q4 as opposed to Netsmart, right?

Sean W. Wieland - Piper Jaffray & Co.

I'm talking about HealthMatics, Core Medical Solutions, the trio there. Am I in the ballpark in thinking it's about a $30 million run rate on those businesses?

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Top-line?

Sean W. Wieland - Piper Jaffray & Co.

Yes.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

You're not far. Yeah, I mean you are in the zipcode.

Sean W. Wieland - Piper Jaffray & Co.

Okay. Thanks so much.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

You're welcome.

Richard J. Poulton - Allscripts Healthcare Solutions, Inc.

Great. So, thanks everybody for joining us today. To sum up, we had an excellent 2016. Financial results continue to improve with accelerating revenue growth, excellent bookings, improving margins and sustainable cash flow. Strategically, we've made multi-year investments in solutions, repositioned Allscripts for the strong fundamental core with multiple growth platforms for global expansion.

I want to thank Allscripts associates for their hard work and dedication. They are driven by a solid vision and a culture of accountability and a passion for our client success. We're dedicated to rewarding the confidence that clients and shareholders have placed in us with strong performance.

We will be holding an investor event in New York on March 21. Look for invitations and webcast details shortly. We'll see many of you in Orlando next week. Have a great evening.

Operator

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your day.

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