2,800 Reasons to Bet on EMR
There are tons of reasons to believe that companies in the business of electronic medical records (EMR) may experience a boom in the next 18 months – and an even bigger one down the road.
The biggest reason? Hospitals that switch to EMR systems by 2014 can expect to receive $5 million to $7 million in incentives from Obama’s HITECH Act. Oh, and missing the deadline could cost each facility $1 million in penalties.
Many hospitals are already making the leap…
Indeed, the EMR market hit $20.7 billion in 2012, a 15% boost over 2011. Take a look…
Despite such rampant growth, however, 56% of hospitals in the United States (or 2,800 facilities) still don’t have at least a basic EMR system. So growth is expected to jump 7.85% a year until 2015.
And the largest EMR system providers may be the biggest beneficiaries from last-minute adopters.
I’ll let the numbers speak for themselves…
Allscripts Healthcare Solutions (MDRX) must be very fond of Obamacare. In the second quarter, the company reported its first year-over-year increase in bookings in the past six quarters: $194 million to $200 million. The Chicago-based company also has a $3-billion backlog. Annual sales doubled from $548 million in 2009 to $1.44 billion in 2012. The stock was recently up 61.5% year-to-date.
Cerner Corporation (CERN) sells another popular EHR system that increased revenue from $1.67 billion in 2009 to over $2.66 billion last year. Adjusted net earnings for the second quarter of 2013 were $119.6 million, an increase of 16% from a year ago. The $16.3-billion company is rolling in a free cash flow of $47.4 million. And it’s sitting on a backlog of $8 billion, a 23% annual increase. Shares have jumped 18.41% year-to-date.
Quality Systems, Inc. (QSII) saw its annual revenue climb from $245 million in mid-2009 to over $460 million in 2012. Lead generation has grown 172% year-over-year. Its sales pipeline jumped to $150.1 million, a 6% improvement – and its first boost in several quarters. Looks like restructuring efforts in late 2012 are starting to pay off. Quality Systems recently announced a partnership with Humana Inc. (HUM) to help spread the word about adoption of EMR to healthcare providers. The company’s shares are up 17.47% year-to-date, and they pay a 3.3% yield.
Athenahealth (ATHN), a cloud-based software company, has seen sales increase over 200% since early 2009. Second-quarter revenue totaled $146.3 million, compared to $103.5 million in the same period last year, an increase of 41%. ATHN also reports cash and cash equivalents of $33.6 million. And shares have jumped 46.1% year-to-date.
Bottom line: All signs point to hospitals jumping on the EMR bandwagon over the next year or so, making now the perfect time to consider investing in the trend.
Ahead of the tape,