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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-35547

 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

36-4392754

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

222 Merchandise Mart, Suite 2024

Chicago, IL 60654

(Address of Principal Executive Offices, Zip Code)

(800) 334-8534

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Stock, par value $0.01 per share

MDRX

The Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

 

 

Indicate by check mark 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        No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes        No   

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes        No   

As of April 26, 2021, there were 141,165,166 shares of the registrant's $0.01 par value common stock outstanding.

 

 


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

FORM 10-Q

For the Fiscal Quarter Ended March 31, 2021

TABLE OF CONTENTS

 

 

  

 

 

PAGE

PART I. FINANCIAL INFORMATION

 

3

Item 1.

 

Financial Statements (unaudited)

 

3

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

26

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

34

Item 4.

 

Controls and Procedures

 

35

PART II. OTHER INFORMATION

 

35

Item 1.

 

Legal Proceedings

 

35

Item 1A.

 

Risk Factors

 

35

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

Item 6.

 

Exhibits

 

36

SIGNATURES

 

37

 

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share amounts)

 

March 31, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

513,400

 

 

$

531,104

 

Restricted cash

 

 

2,110

 

 

 

6,361

 

Accounts receivable, net of allowance of $32,078 and $31,596 as of

   March 31, 2021 and December 31, 2020, respectively

 

 

359,068

 

 

 

347,355

 

Contract assets, net of allowance of $1,068 as of March 31, 2021 and December 31, 2020

 

 

106,945

 

 

 

106,717

 

Income tax receivable

 

 

25,421

 

 

 

25,421

 

Prepaid expenses and other current assets

 

 

128,493

 

 

 

136,264

 

Total current assets

 

 

1,135,437

 

 

 

1,153,222

 

Fixed assets, net

 

 

67,376

 

 

 

72,162

 

Software development costs, net

 

 

188,716

 

 

 

193,202

 

Intangible assets, net

 

 

273,927

 

 

 

286,602

 

Goodwill

 

 

974,772

 

 

 

974,729

 

Deferred taxes, net

 

 

5,779

 

 

 

5,790

 

Contract assets - long-term, net of allowance of $4,273 as of March 31, 2021 and December 31, 2020

 

 

45,845

 

 

 

43,682

 

Right-of-use assets - operating leases

 

 

90,180

 

 

 

96,601

 

Other assets

 

 

89,360

 

 

 

91,628

 

Total assets

 

$

2,871,392

 

 

$

2,917,618

 

 


3


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

(In thousands, except per share amounts)

 

March 31, 2021

 

 

December 31, 2020

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

26,886

 

 

$

35,905

 

Accrued expenses

 

 

93,499

 

 

 

100,262

 

Accrued compensation and benefits

 

 

84,153

 

 

 

118,771

 

Deferred revenue

 

 

380,355

 

 

 

334,764

 

Current operating lease liabilities

 

 

22,571

 

 

 

22,264

 

Current liabilities attributable to discontinued operations

 

 

272,872

 

 

 

322,811

 

Total current liabilities

 

 

880,336

 

 

 

934,777

 

Long-term debt

 

 

169,442

 

 

 

167,587

 

Deferred revenue

 

 

3,020

 

 

 

3,471

 

Deferred taxes, net

 

 

16,898

 

 

 

18,186

 

Long-term operating lease liabilities

 

 

87,703

 

 

 

93,463

 

Other liabilities

 

 

35,335

 

 

 

33,891

 

Total liabilities

 

 

1,192,734

 

 

 

1,251,375

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock: $0.01 par value, 1,000 shares authorized,

   no shares issued and outstanding as of March 31, 2021 and December 31, 2020

 

 

0

 

 

 

0

 

Common stock: $0.01 par value, 349,000 shares authorized as of March 31, 2021

   and December 31, 2020; 275,241 and 140,626 shares issued and outstanding

   as of March 31, 2021, respectively; 274,558 and 139,942 shares issued

   and outstanding as of December 31, 2020, respectively

 

 

2,751

 

 

 

2,745

 

Treasury stock: at cost, 134,616 shares as of March 31, 2021 and

   December 31, 2020

 

 

(870,558

)

 

 

(870,558

)

Additional paid-in capital

 

 

1,906,534

 

 

 

1,902,776

 

Retained earnings

 

 

642,175

 

 

 

633,118

 

Accumulated other comprehensive loss

 

 

(2,244

)

 

 

(1,838

)

Total stockholders’ equity

 

 

1,678,658

 

 

 

1,666,243

 

Total liabilities and stockholders’ equity

 

$

2,871,392

 

 

$

2,917,618

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended March 31,

 

(In thousands, except per share amounts)

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

$

222,691

 

 

$

232,140

 

Client services

 

 

145,661

 

 

 

149,224

 

Total revenue

 

 

368,352

 

 

 

381,364

 

Cost of revenue:

 

 

 

 

 

 

 

 

Software delivery, support and maintenance

 

 

70,731

 

 

 

73,084

 

Client services

 

 

118,087

 

 

 

148,220

 

Amortization of software development and

    acquisition-related assets

 

 

29,489

 

 

 

28,124

 

Total cost of revenue

 

 

218,307

 

 

 

249,428

 

    Gross profit

 

 

150,045

 

 

 

131,936

 

Selling, general and administrative expenses

 

 

81,708

 

 

 

92,825

 

Research and development

 

 

49,173

 

 

 

59,377

 

Amortization of intangible and acquisition-related assets

 

 

5,824

 

 

 

6,710

 

Income (loss) from operations

 

 

13,340

 

 

 

(26,976

)

Interest expense

 

 

(3,143

)

 

 

(10,665

)

Other income, net

 

 

1,037

 

 

 

522

 

Equity in net income of unconsolidated investments

 

 

22

 

 

 

200

 

Income (loss) from continuing operations before income taxes

 

 

11,256

 

 

 

(36,919

)

Income tax (provision) benefit

 

 

(2,663

)

 

 

4,534

 

Income (loss) from continuing operations, net of tax

 

 

8,593

 

 

 

(32,385

)

(Loss) income from discontinued operations

 

 

(29

)

 

 

16,218

 

Gain on sale of discontinued operations

 

 

647

 

 

 

0

 

Income tax effect on discontinued operations

 

 

(154

)

 

 

(4,187

)

Income from discontinued operations, net of tax

 

 

464

 

 

 

12,031

 

Net income (loss)

 

$

9,057

 

 

$

(20,354

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.06

 

 

$

(0.20

)

Discontinued operations

 

 

0.00

 

 

 

0.07

 

Net income (loss) per share - Basic

 

$

0.06

 

 

$

(0.13

)

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.06

 

 

$

(0.20

)

Discontinued operations

 

 

0.00

 

 

 

0.07

 

Net income (loss) per share - Diluted

 

$

0.06

 

 

$

(0.13

)

The accompanying notes are an integral part of these consolidated financial statements.

5


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

(In thousands)

 

2021

 

 

2020

 

Net income (loss)

 

$

9,057

 

 

$

(20,354

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

99

 

 

 

(2,512

)

Change in fair value of derivatives qualifying as cash flow hedges

 

 

(681

)

 

 

(473

)

Other comprehensive income (loss) before income tax benefit

 

 

(582

)

 

 

(2,985

)

Income tax benefit related to items in other comprehensive income (loss)

 

 

176

 

 

 

122

 

Total other comprehensive income (loss)

 

 

(406

)

 

 

(2,863

)

Comprehensive income (loss)

 

$

8,651

 

 

$

(23,217

)

The accompanying notes are an integral part of these consolidated financial statements.

 


6


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

Three Months Ended March 31,

 

(In thousands)

 

2021

 

 

2020

 

Number of common shares

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

274,558

 

 

 

272,609

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

683

 

 

 

875

 

Balance at end of period

 

 

275,241

 

 

 

273,484

 

Common stock

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,745

 

 

$

2,725

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

6

 

 

 

8

 

Balance at end of period

 

$

2,751

 

 

$

2,733

 

Number of treasury stock shares

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(134,616

)

 

 

(110,134

)

Purchase of treasury stock

 

 

0

 

 

 

(1,449

)

Balance at end of period

 

 

(134,616

)

 

 

(111,583

)

Treasury stock

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(870,558

)

 

$

(571,157

)

Purchase of treasury stock

 

 

0

 

 

 

(9,714

)

Balance at end of period

 

$

(870,558

)

 

$

(580,871

)

Additional paid-in capital

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

1,902,776

 

 

$

1,907,348

 

Stock-based compensation

 

 

8,701

 

 

 

9,954

 

Common stock issued under stock compensation plans,

    net of shares withheld for employee taxes

 

 

(5,980

)

 

 

(3,168

)

Warrants issued

 

 

1,037

 

 

 

682

 

Balance at end of period

 

$

1,906,534

 

 

$

1,914,816

 

Retained earnings (accumulated deficit)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

633,118

 

 

$

(49,336

)

Net income (loss)

 

 

9,057

 

 

 

(20,354

)

ASU 2016-13 implementation adjustments

 

 

0

 

 

 

(17,953

)

Balance at end of period

 

$

642,175

 

 

$

(87,643

)

Accumulated other comprehensive loss

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(1,838

)

 

$

(4,392

)

Foreign currency translation adjustments, net

 

 

99

 

 

 

(2,512

)

Unrecognized loss on derivatives qualifying as cash flow hedges, net of tax

 

 

(505

)

 

 

(351

)

Balance at end of period

 

$

(2,244

)

 

$

(7,255

)

Total Stockholders’ Equity at beginning of period

 

$

1,666,243

 

 

$

1,285,188

 

Total Stockholders’ Equity at end of period

 

$

1,678,658

 

 

$

1,241,780

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

7


 

ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended March 31,

 

(In thousands)

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

9,057

 

 

$

(20,354

)

Less: Income from discontinued operations

 

 

464

 

 

 

12,031

 

Income (loss) from continuing operations

 

 

8,593

 

 

 

(32,385

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

44,026

 

 

 

49,505

 

Operating right-of-use asset amortization

 

 

5,019

 

 

 

5,463

 

Stock-based compensation expense

 

 

8,701

 

 

 

9,954

 

Deferred taxes

 

 

(1,122

)

 

 

(2,160

)

Equity in net income of unconsolidated investments

 

 

(22

)

 

 

(200

)

Other loss (income), net

 

 

1,752

 

 

 

(1,072

)

Changes in operating assets and liabilities (net of businesses acquired):

 

 

 

 

 

 

 

 

Accounts receivable and contract assets, net

 

 

33,795

 

 

 

3,960

 

Prepaid expenses and other assets

 

 

7,935

 

 

 

20,409

 

Accounts payable

 

 

(8,726

)

 

 

(23,627

)

Accrued expenses

 

 

(5,233

)

 

 

10,087

 

Accrued compensation and benefits

 

 

(34,633

)

 

 

(640

)

Deferred revenue

 

 

(1,475

)

 

 

1,849

 

Other liabilities

 

 

1,444

 

 

 

2,933

 

Operating leases

 

 

(4,143

)

 

 

(6,143

)

Accrued DOJ settlement

 

 

0

 

 

 

(57,289

)

Net cash provided by (used in) operating activities - continuing operations

 

 

55,911

 

 

 

(19,356

)

Net cash (used in) provided by operating activities - discontinued operations

 

 

(51,336

)

 

 

15,648

 

    Net cash provided by (used in) operating activities

 

 

4,575

 

 

 

(3,708

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,377

)

 

 

(2,777

)

Capitalized software

 

 

(18,144

)

 

 

(26,490

)

Purchases of equity securities, other investments and related intangible assets, net

 

 

(221

)

 

 

(3,028

)

Sale of other investments

 

 

1,753

 

 

 

0

 

Net cash used in investing activities - continuing operations

 

 

(18,989

)

 

 

(32,295

)

Net cash used in investing activities - discontinued operations

 

 

0

 

 

 

(2,134

)

    Net cash used in investing activities

 

 

(18,989

)

 

 

(34,429

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Taxes paid related to net share settlement of equity awards

 

 

(5,972

)

 

 

(3,174

)

Payments for issuance costs on 0.875% Convertible Senior Notes

 

 

0

 

 

 

(758

)

Credit facility payments

 

 

0

 

 

 

(80,000

)

Credit facility borrowings, net of issuance costs

 

 

0

 

 

 

210,000

 

Repurchase of common stock

 

 

0

 

 

 

(9,714

)

Payment of acquisition and other financing obligations

 

 

(1,542

)

 

 

(2,911

)

      Net cash (used in) provided by financing activities

 

 

(7,514

)

 

 

113,443

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(27

)

 

 

(713

)

Net (decrease) increase in cash and cash equivalents

 

 

(21,955

)

 

 

74,593

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

537,465

 

 

 

137,539

 

Cash, cash equivalents and restricted cash, end of period

 

$

515,510

 

 

$

212,132

 

 

The accompanying notes are an integral part of these consolidated financial statements.


8


ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1. Basis of Presentation and Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Allscripts Healthcare Solutions, Inc. (“Allscripts”) and its wholly-owned subsidiaries and controlled affiliates. All significant intercompany balances and transactions have been eliminated. Each of the terms “we,” “us,” “our” or the “Company” as used herein refers collectively to Allscripts Healthcare Solutions, Inc. and its wholly-owned subsidiaries and controlled affiliates, unless otherwise stated.

Unaudited Interim Financial Information

The unaudited interim consolidated financial statements as of and for the three months ended March 31, 2021 and 2020 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These interim consolidated financial statements are unaudited and, in the opinion of our management, include all adjustments, consisting of normal recurring adjustments and accruals, necessary to present fairly the consolidated financial statements for the periods presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The consolidated results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the SEC's rules and regulations for interim reporting. The Company believes that the disclosures made are adequate to make these unaudited interim consolidated financial statements not misleading. They should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (our “Form 10-K”).

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Our estimates and assumptions consider the economic implications of COVID-19 on our critical and significant accounting estimates. Actual results could differ materially from these estimates.

Significant Accounting Policies

There have been no changes to our significant accounting policies from those disclosed in our Form 10-K.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740)” (“ASU 2019-12”), which is part of the FASB’s overall simplification initiative to reduce the costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 simplifies accounting guidance for intraperiod allocations, deferred tax liabilities, year-to-date losses in interim periods, franchise taxes, step-up in tax basis of goodwill, separate entity financial statements and interim recognition of tax laws or rate changes. ASU 2019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2020. We adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a significant impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas. The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years, beginning after December 15, 2021. We are currently evaluating the impact of this accounting guidance.

We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, will have a material impact on our consolidated financial statements.

 

9


 

2. Revenue from Contracts with Customers

Our two primary revenue streams are (i) software delivery, support and maintenance and (ii) client services. Software delivery, support and maintenance revenue consists of all of our proprietary software sales (either under a perpetual or term license delivery model), subscription-based software sales, transaction-related revenue, the resale of hardware and third-party software and revenue from post-contract client support and maintenance services, which include telephone support services, maintaining and upgrading software and ongoing enhanced maintenance. Client services revenue consists of revenue from managed services solutions, such as private cloud hosting, outsourcing and revenue cycle management, as well as other client services and project-based revenue from implementation, training and consulting services. For some clients, we host the software applications licensed from us using our own or third-party servers. For other clients, we offer an outsourced service in which we assume partial to total responsibility for a healthcare organization’s IT operations using our employees.

At March 31, 2021 and December 31, 2020, we had capitalized costs to obtain or fulfill a contract of $16.2 million and $16.8 million, respectively, in Prepaid and other current assets and $28.4 million and $27.9 million, respectively, in Other assets. During the three months ended March 31, 2021 and 2020, we recognized $5.8 million and $6.7 million, respectively, of amortization expense related to such capitalized costs. The amortization of these capitalized costs to obtain a contract are included in Selling, general and administrative expense within our consolidated statements of operations.

The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable, contract assets and customer advances and deposits. Accounts receivable, net includes both billed and unbilled amounts where the right to receive payment is unconditional and only subject to the passage of time. Contract assets include amounts where revenue recognized exceeds the amount billed to the customer and the right to payment is not solely subject to the passage of time. Deferred revenue includes advanced payments and billings in excess of revenue recognized. Our contract assets and deferred revenue are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term based on the timing of when we expect to complete the related performance obligations and bill the customer. Deferred revenue is classified as current or long-term based on the timing of when we expect to recognize revenue.

The breakdown of revenue recognized based on the origination of performance obligations and elected accounting expedients is presented in the table below:

(In thousands)

 

Three Months

Ended

March 31, 2021

 

Revenue related to deferred revenue balance at beginning of period

 

$

137,848

 

Revenue related to new performance obligations satisfied during the period

 

 

173,316

 

Revenue recognized under "right-to-invoice" expedient

 

 

56,811

 

Reimbursed travel expenses, shipping and other revenue

 

 

377

 

Total revenue

 

$

368,352

 

 

(In thousands)

 

Three Months

Ended

March 31, 2020

 

Revenue related to deferred revenue balance at beginning of period

 

$

105,366

 

Revenue related to new performance obligations satisfied during the period

 

 

216,580

 

Revenue recognized under "right-to-invoice" expedient

 

 

58,059

 

Reimbursed travel expenses, shipping and other revenue

 

 

1,359

 

Total revenue

 

$

381,364

 

The aggregate amount of contract transaction price related to remaining unsatisfied performance obligations (commonly referred to as “backlog”) represents contracted revenue that has not yet been recognized and includes both deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Total backlog equaled $4.0 billion as of March 31, 2021, of which we expect to recognize approximately 31% over the next 12 months, and the remaining 69% thereafter.

10


Revenue Recognition

We recognize revenue only when we satisfy an identified performance obligation (or bundle of obligations) by transferring control of a promised product or service to a customer. We consider a product or service to be transferred when a customer obtains control because a customer has sole possession of the right to use (or the right to direct the use of) the product or service for the remainder of its economic life or to consume the product or service in its own operations. We evaluate the transfer of control primarily from the customer’s perspective as this reduces the risk that revenue is recognized for activities that do not transfer control to the customer.

The majority of our revenue is recognized over time because a customer continuously and simultaneously receives and consumes the benefits of our performance. The exceptions to this pattern are our sales of perpetual and term software licenses, and hardware, where we determined that a customer obtains control of the asset upon granting of access, delivery or shipment.

We disaggregate our revenue from contracts with customers based on the type of revenue and nature of revenue stream, as we believe those categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The below tables summarize revenue by type and nature of revenue stream as well as by our reportable segments:

 

 

Three Months Ended March 31,

 

(In thousands)

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

  Recurring revenue

 

$

295,648

 

 

$

309,981

 

  Non-recurring revenue

 

 

72,704

 

 

 

71,383

 

      Total revenue

 

$

368,352

 

 

$

381,364

 

 

 

 

Three Months Ended March 31, 2021

 

(In thousands)

 

Core Clinical and Financial Solutions

 

 

Data, Analytics and Care Coordination

 

 

Unallocated Amounts

 

 

Total

 

Software delivery, support and maintenance

 

$

165,210

 

 

$

61,859

 

 

$

(4,378

)

 

$

222,691

 

Client services

 

 

143,955

 

 

 

1,706

 

 

 

0

 

 

 

145,661

 

Total revenue

 

$

309,165

 

 

$

63,565

 

 

$

(4,378

)

 

$

368,352

 

 

 

 

Three Months Ended March 31, 2020

 

(In thousands)

 

Core Clinical and Financial Solutions

 

 

Data, Analytics and Care Coordination

 

 

Unallocated Amounts

 

 

Total

 

Software delivery, support and maintenance

 

$

174,081

 

 

$

60,458

 

 

$

(2,399

)

 

$

232,140

 

Client services

 

 

146,251

 

 

 

2,973

 

 

 

0

 

 

 

149,224

 

Total revenue

 

$

320,332

 

 

$

63,431

 

 

$

(2,399

)