One-glance verdict
Undervalued
$17.56 our estimate vs market $4.74
Wall Street consensus: $6.50 (-63.0% lower than our fair-value estimate)
73% below our estimate, below the bear case
Fundamentals snapshot
Veradigm Inc.
MDRX · PNK · Healthcare · Health Information Services
Current price
$4.74
52-week range
$3.25 - $6.00
Market cap
$516.62M
Balance sheet
Healthy
-3.08x Concerning
Net cash $273.79M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 1.8% last year.
- Reward Free cash flow was positive in 1/10 years.
- Risk Return on equity was -31.0% last year — the company lost money on shareholders' equity.
- Risk Insider ownership is only 4.4% (peer median: 6.3%).
What this company does
Veradigm Inc.
Veradigm provides software that doctors and hospitals use to manage their practices, including digital patient records and billing. The company's main business involves packaging this vast collection of anonymous patient data and selling it to drug companies and insurers for research and analysis. This makes Veradigm a key data middleman connecting the day-to-day practice of medicine with the larger healthcare industry.
How the company got here
Veradigm started as a company called Allscripts, which has been around since 1986, making software for the healthcare industry. [9] Over the years, it grew by buying other healthcare technology companies. [9] In 2022, the company decided to focus on its most promising area: using health data to connect doctors, insurance companies, and drug companies. [1] To signal this new focus, it sold off some of its older businesses and officially changed its name from Allscripts to Veradigm in early 2023. [4]
What it actually does
Veradigm is a healthcare technology company that acts like a digital hub for the healthcare industry. It provides the software and data plumbing that connects doctor's offices, insurance companies (often called 'payers' because they pay for care), and life science companies that develop new medicines. [2, 4] For a patient, this might look like the electronic health record (EHR — the digital version of your medical chart) your doctor uses, or the system that sends your prescription to the pharmacy electronically. [10] The company's main goal is to use its vast network, which covers over 170 million patients, to make healthcare work better and cost less. [4]
Provider
This is Veradigm's largest business, making up the vast majority of its sales. [6, 8] It sells software and services directly to healthcare providers like doctor's offices and clinics. [2] This includes the electronic health record (EHR) systems doctors use to keep track of patient visits, as well as practice management software for scheduling appointments and sending bills. [10] A key service here is revenue cycle management (helping the doctor's office get paid correctly and on time by insurance companies). [23]
Payer
This part of the company serves health insurance companies, also known as 'payers'. [2] Veradigm provides these companies with data and analytics tools to help them manage costs and improve patient health. [7] For example, they can analyze data to identify patients who might be at high risk for a certain disease and help the insurance plan offer preventative care. This is a smaller, but important, piece of Veradigm's overall business. [6]
Life Sciences
This is the company's third main business, which works with pharmaceutical and biotech companies. [2] Veradigm provides these companies with access to large sets of anonymous patient data (meaning all personal identifying information has been removed to protect privacy). [4, 5] Life science companies pay for this data to help them with clinical research, see how their medicines are being used by real patients, and speed up the process of developing new drugs. [2] This is currently the smallest of the three business segments. [18]
What management is betting on now
The company's current strategy is called 'Reset, Recover, Reignite,' which focuses on growth and efficiency. [11] A huge part of this is a big bet on artificial intelligence (AI) to make its products smarter. [20] For example, they are developing tools that can listen to a doctor's conversation with a patient and automatically write the medical notes, freeing the doctor to focus on the patient. [10, 20] Management is also streamlining the company by getting rid of less successful products to focus on what works best, while building a more global workforce to operate more efficiently. [20]
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $17.56 vs current price $4.74
Wall Street consensus is the average analyst price target: $6.50 (-63.0% lower than our fair-value estimate).
Our most-likely fair value is $17.56 a share — about 270.5% above today's price of $4.74, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $273.8M - more cash than debt. Interest coverage -3.1x.
Net debt
$-273.79M
Interest coverage
-3.08x
Veradigm Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
MDRX
BASELINE
Veradigm Inc.
Total debt $218.81M Interest coverage -3.08x This is the baseline the peer rows are being compared against.
Total debt $67.95M Interest coverage -0.95x Neither company has much profit cushion over interest right now.
Total debt $169.98M Interest coverage -1.76x Neither company has much profit cushion over interest right now.
Total debt $538.95M Interest coverage 2.05x This peer still has a real interest-payment cushion, while MDRX does not.
What you should know
The case for and against MDRX
2 Rewards
2 Risks
Rewards
-
Revenue grew 1.8% last year.
-
Free cash flow was positive in 1/10 years.
Risks
-
Return on equity was -31.0% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 4.4% (peer median: 6.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
15.80x
P/B
0.64x
P/S
0.87x
EV/EBITDA
-3.11x
PEG ratio
1.95x
Profitability
How much profit each dollar creates
Gross margin
50.8%
Operating margin
16.6%
Net margin
-49.0%
ROE
-31.0%
ROA
-3.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.19x
Current ratio
1.29x
Quick ratio
1.17x
Total debt
$218.81M
Total cash
$492.60M
Growth
How the business has been compounding
Revenue TTM
$594.41M
Revenue 5Y CAGR
1.8%
EPS TTM
-2.70
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$115.56M
Free CF TTM
$83.30M
FCF margin
14.0%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2008-10-07