EIS Business Pro Forma Adjustments

Pro Forma

Allscripts and

NantHealth

Combined

{a}

EIS

Business

Historical

{b}

Discontinued Operations

Other

Pro Forma Allscripts, NantHealth and EIS Combined

ASSETS

Current assets:

Cash and cash equivalents

$

87,445

$

1,065

$

88,510

Accounts receivable, net

420,947

93,758

(9,789

)

504,916

Prepaid expenses and other current assets

115,357

20,028

(4,944

)

130,441

Total current assets

623,749

114,851

(14,733

)

723,867

Available for sale marketable securities

0

-

Fixed assets and capitalized software

   development costs, net

360,938

22,113

(726

)

(10,897

)

{d}

371,428

Intangible assets, net

711,350

3,167

143,033

{e}

857,550

Goodwill

1,958,377

124,000

(6,285

)

(97,712

)

{f}

1,978,380

Deferred Taxes and other assets

139,078

1,763

140,841

Total assets

$

3,793,492

$

265,894

$

(21,744

)

$

34,424

$

4,072,066

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

114,950

$

2,048

$

(7

)

$

116,991

Accrued expenses

138,771

36,270

(11,683

)

163,358

Deferred revenue

393,942

215,970

(39,189

)

(97,874

)

{g}

472,849

Current maturities of long-term debt and capital lease

   obligations

32,446

32,446

Total current liabilities

680,109

254,288

(50,879

)

(97,874

)

785,644

Long-term debt and capital lease

   obligations

1,314,083

169,070

{c}

1,483,153

Deferred revenue

21,434

5,215

(205

)

(3,487

)

{g}

22,957

Deferred Taxes and other liabilities

203,554

6,610

(4,287

)

123

{h}

206,000

Total liabilities

2,219,180

266,113

(55,371

)

67,832

2,497,754

Redeemable convertible non-controlling interest -

   Netsmart

409,610

409,610

Stockholders’ equity

1,164,702

-

1,164,702

Net assets acquired and liabilities assumed

0

(219

)

33,627

(33,408

)

{i}

-

Total liabilities and stockholders’ equity

$

3,793,492

$

265,894

$

(21,744

)

$

34,424

$

4,072,066

EIS Business Pro Forma Adjustments

Pro Forma Allscripts, Netsmart, HealthMEDX and NantHealth Combined

EIS

Business

Historical

{b}

Discontinued Operations

Other

Pro Forma Allscripts, Netsmart, HealthMEDX, NantHealth and EIS Combined

Revenue

$

1,660,308

$

564,322

$

(112,242

)

$

(83,985

)

{g}

$

2,028,403

Costs and expenses:

Cost of revenue

937,482

251,550

(23,311

)

2,988

{e}

1,168,709

Selling, general and administrative expenses

469,177

85,550

(17,005

)

6,104

{e}

543,826

Research and development

210,553

145,576

(17,180

)

338,949

Total costs and expenses

1,617,212

482,676

(57,496

)

9,092

2,051,484

Income (loss) from operations

43,096

81,646

(54,746

)

(93,077

)

(23,081

)

Interest expense

(83,206

)

(5,853

)

{k}

(89,059

)

Goodwill impairment loss

(51,062

)

(290,000

)

(341,062

)

Other (loss) income, net

(3,757

)

285

(2,113

)

(5,585

)

(Loss) income before income taxes

(94,929

)

(208,069

)

(56,859

)

(98,930

)

(458,787

)

Income tax benefit (provision)

5,980

39,572

{l}

45,552

Net income (loss)

(88,949

)

(208,069

)

(56,859

)

(59,358

)

(413,235

)

Net income attributable to

   non-controlling interest

(146

)

(146

)

Accretion of redemption preference

   on redeemable convertible

   non-controlling interest - Netsmart

(45,173

)

(45,173

)

Net loss attributable to Allscripts

   Healthcare Solutions, Inc.

   stockholders

$

(134,268

)

$

(208,069

)

$

(56,859

)

$

(59,358

)

$

(458,554

)

Loss per share - basic attributable to

   Allscripts Healthcare Solutions, Inc.

   stockholders

$

(0.72

)

$

(2.46

)

Loss per share - diluted attributable to

   Allscripts Healthcare Solutions, Inc.

   stockholders

$

(0.72

)

$

(2.46

)

Weighted-average shares outstanding:

Basic

186,188

186,188

Diluted

186,188

186,188

EIS Business Pro Forma Adjustments

Pro Forma Allscripts, Netsmart, HealthMEDX and NantHealth Combined

EIS

Business

Historical

{b}

Discontinued Operations

Other

Pro Forma Allscripts, Netsmart, HealthMEDX, NantHealth and EIS Combined

Revenue

$

844,866

$

247,838

$

(45,777

)

$

(2,992

)

{g}

$

1,043,935

Costs and expenses:

Cost of revenue

484,251

104,838

(10,317

)

1,913

{e}

580,685

Selling, general and administrative expenses

245,218

38,551

(6,174

)

3,052

{e}

280,178

(470

)

{j}

Research and development

103,468

59,895

(3,387

)

159,976

Total costs and expenses

832,937

203,284

(19,878

)

4,496

1,020,839

Income from operations

11,929

44,554

(25,899

)

(7,488

)

23,097

Interest expense

(40,470

)

(1,415

)

{k}

(41,885

)

Impairment of long-term investments

(144,590

)

(144,590

)

Other (loss) income, net

1,653

493

(970

)

1,176

(Loss) income before income taxes

(171,478

)

45,047

(26,869

)

(8,903

)

(162,203

)

Income tax benefit (provision)

(1,552

)

3,561

{l}

2,009

Net income (loss)

(173,030

)

45,047

(26,869

)

(5,342

)

(160,194

)

Net income attributable to

   non-controlling interest

(189

)

(189

)

Accretion of redemption preference

   on redeemable convertible

   non-controlling interest - Netsmart

(21,925

)

(21,925

)

Net loss attributable to Allscripts

   Healthcare Solutions, Inc.

   stockholders

$

(195,144

)

$

45,047

$

(26,869

)

$

(5,342

)

$

(182,308

)

Loss per share - basic attributable to

   Allscripts Healthcare Solutions, Inc.

   stockholders

$

(1.08

)

$

(1.01

)

Loss per share - diluted attributable to

   Allscripts Healthcare Solutions, Inc.

   stockholders

$

(1.08

)

$

(1.01

)

Weighted-average shares outstanding:

Basic

181,193

181,193

Diluted

181,193

181,193

(In thousands)

Aggregate purchase price

$

185,000

Add: Estimated net working capital surplus

536

Less: Assumption of restructuring indebtedness

(16,466

)

Net consideration paid in cash for the EIS Business

$

169,070

(In thousands)

Cash and cash equivalents

$

1,068

Accounts receivable, net

68,234

Prepaid expenses and other current assets

18,921

Fixed assets

9,797

Intangible assets

146,200

Goodwill

27,459

Other assets

1,602

Accounts payable and accrued expenses

(32,688

)

Deferred revenue

(69,017

)

Other liabilities

(2,506

)

Net assets acquired

$

169,070

June 30,

2017

ASSETS

Current assets:

Accounts receivable, net

$

9,789

Prepaid expenses and other current assets

4,944

Total current assets

14,733

Fixed assets and capitalized software development costs, net

726

Goodwill

6,285

Total assets attributable to discontinued operations

$

21,744

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

7

Accrued expenses

11,683

Deferred revenue

39,189

Total current liabilities

50,879

Deferred revenue

205

Deferred taxes and other liabilities

4,287

Total liabilities attributable to discontinued operations

55,371

Net assets acquired and liabilities assumed

$

(33,627

)

For the Year

ended

December 31, 2016

For the Six months ended

June 30,

2017

Revenue

$

112,242

$

45,777

Costs and expenses:

Cost of revenue

23,311

10,317

Selling, general and administrative expenses

17,005

6,174

Research and development

17,180

3,387

Total costs and expenses

57,496

19,878

Income (loss) from operations

54,746

25,899

Other (loss) income, net

2,113

970

Income (loss) before income taxes

56,859

26,869

Income tax benefit (provision)

Net income (loss)

$

56,859

$

26,869

(a)

Represents Allscripts unaudited pro forma combined abbreviated financial information included in the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on November 9, 2017 and furnished herewith as Exhibit 99.4, which contained pro forma information regarding our acquisitions of the provider/patient engagement solutions business of NantHealth, Inc. (the “NantHealth business”) on August 25, 2017, Netsmart, Inc. (“Netsmart”) on April 19, 2016 and HealthMEDX, LLC (“HealthMEDX”) on October 27, 2016.

(b)

The EIS business’ fiscal year ends on March 31^st. Therefore, the EIS Business historical amounts used in the unaudited pro forma combined abbreviated statement of operations for the year ended December 31, 2016 represents the EIS Business results for its fiscal year ended March 31, 2017. The EIS Business historical amounts used in the unaudited pro forma combined abbreviated statement of operations for the six months ended June 30, 2017 represents the combined total of the EIS Business results for its fourth fiscal quarter ended March 31, 2017 and its first fiscal quarter ended June 30, 2017.

(c)

Represents the incremental borrowings on Allscripts’ senior secured credit facility directly attributable to the acquisition of the EIS Business.

(d)

Adjustment to write-off capitalized software development costs as part of the preliminary allocation of the EIS Business’ purchase price.  The write-off of the amortization of capitalized software development costs is included in the intangible asset amortization pro forma adjustment.

(e)

Reflects the adjustment of the EIS Business’ historical intangible assets acquired to their estimated fair values. As part of the preliminary valuation analysis, we identified intangible assets, including technology, product trademarks and customer relationships. The fair value of identifiable intangible assets is determined primarily using the “income approach,” which requires a forecast of all expected future cash flows. We will amortize these intangible assets using the straight-line method.  The following table summarizes the estimated fair values of the EIS Business’ identifiable intangible assets and their estimated useful lives: 

Estimated Fair Value

Estimated Useful Life in Years

Year ended

December 31, 2016 Amortization Expense

Six Months ended

June 30, 2017 Amortization Expense

Technology

$

59,400

7 years

$

8,486

$

4,243

Product Trademarks

4,100

7 years

586

293

Customer Relationships

82,700

11 years

7,518

3,759

Total

$

146,200

$

16,590

$

8,295

Less: Historical amortization expense - Technology

(5,498

)

(2,330

)

Less: Historical amortization expense - Customer Relationships and Other

(2,000

)

(1,000

)

Pro forma adjustments to amortization expense - Technology

$

2,988

$

1,913

Pro forma adjustments to amortization expense - Customer

   Relationships and Product Trademarks

$

6,104

$

3,052

(f)

Reflects adjustment to remove the EIS Business’ historical goodwill and record goodwill associated with the EIS Business acquisition in the amount of $20 million. This goodwill amount is different from the goodwill amount shown in Note 3 above of $27 million, since it is based on the assumption that the EIS Business acquisition occurred on June 30, 2017 for purposes of the pro forma combined abbreviated balance sheet presentation.

(g)

Represents the estimated adjustments to decrease the assumed deferred revenue obligations to fair value and related amortization of such adjustments. The fair value was determined based on the estimated costs to fulfill the remaining performance obligations plus a normal profit margin. After the acquisitions, this adjustment will have a continuing impact and will reduce revenue related to the assumed performance obligations as these obligations are satisfied.

(h)

Represents the unfavorable lease liability related to one of the acquired real estate leases with a remaining contract term of 2 years.

(i)

Represents the elimination of the historical difference between the net assets acquired and liabilities assumed of the EIS Business.

(j)

Adjustment to reflect transaction-related costs incurred in connection with the EIS Business acquisition.

(k)

Represents the incremental interest expense resulting from the new debt incurred to finance the EIS Business acquisition and related increase in the interest rate margin on the entire Allscripts senior secured credit facility. Additionally, a 0.125% change in variable interest rates would result in approximately $0.7 million and $0.3 million change in interest expense for the year ended December 31, 2016 and the six months ended June 30, 2017, respectively.

(l)

Reflects the income tax effect of pro forma adjustments based on the estimated blended federal and state statutory rate of 40%.