Allscripts Dips; Final Buying Opportunity?

CHICAGO (TheStreet) -- Health care information technology provider Allscripts-Misys Healthcare Solutions(MDRX) provided a reasonably solid earnings report for the second quarter on Monday morning, and even raised its net income guidance for 2010. However, Allscripts-Misys shares were down more than 6%, leading a retreat among health care information technology providers.

How a positive earnings report can lead to a negative market reaction for health care information technology player Allscripts-Misys is part and parcel of the ongoing investor uncertainty over Obamacare.

The government, of course, is going to pay back hospitals and physician groups to the tune of $45 billion to make the move to electronic records, and the bigger chunk of government money -- $25 billion -- is slated for the physician groups where Allscripts has a big business.

All of the health care IT stocks -- such as Cerner(CERN), Athenahealth(ATHN) and Quality Systems(QSII) -- have thus been on a big run up as a result of the planned adoption of electronic records.

That run ended Monday morning.

While the Allscripts-Misys earnings were in line with analyst expectations, and the company is expected to broadly benefit from the move to electronic records, the fears have been that physicians will be slower to make the move than hospitals, and that will back up earnings for the health care IT players.

Allscripts' bookings level in its earnings came in lower than expectations, at $94 million in bookings for the second quarter of fiscal 2010 (ended Nov. 30, 2009). The $94 million in bookings represented a 16% increase over the previous year's bookings level, but still fell short of widely held analyst expectations of a bookings number north of $100 million. The disappointing bookings level reinforces fears that physicians may not move as quickly as hoped to electronic systems and purchase of Allscripts' technology.