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Business Combinations and Other Investments (Tables)

12 Months Ended

Dec. 31, 2016

The revenue and earnings of Netsmart, since April 19, 2016, and HealthMEDX, since October 27, 2016, are included in our consolidated statement of operations for the year ended December 31, 2016 and the supplemental pro forma revenue and net loss of the combined entity, presented as if the acquisitions of both entities had occurred on January 1, 2015, are as follows:

	Year Ended December 31,
(In thousands, except per share amounts)	2016			2015
Actual from Netsmart since acquisition date of April 19, 2016:
Revenue ⁽¹⁾	$	173,361		$	0
Net loss ⁽¹⁾	$	(27,709	)	$	0

Actual from HealthMEDX since acquisition date of October 27, 2016:
Revenue	$	4,725		$	0
Net loss	$	602		$	0

Supplemental pro forma data for combined entity:
Revenue	$	1,644,004		$	1,579,848
Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders	$	(44,728	)	$	(133,467	)
Loss per share, basic and diluted	$	(0.24	)	$	(0.72	)

(1)

Amounts are not adjusted for the effects of transactions between Allscripts and Netsmart and include HealthMEDX actual results since October 27, 2016.

Summary of Other Equity Investments Included in Other Assets

The following table summarizes our other equity investments which are included in other assets in the accompanying consolidated balance sheets:

	Number of
	Investees		Original		Carrying Value at
(In thousands)	at December 31, 2016		Investment		December 31, 2016		December 31, 2015
Equity method investments ⁽¹⁾:
Nant Health, LLC ⁽²⁾		0	$	0	$	0	$	203,117
Other		3		1,658		2,436		2,436
Total equity method investments		3		1,658		2,436		205,553
Cost method investments		5		29,991		26,041		17,876
Total equity investments		8	$	31,649	$	28,477	$	223,429

(1)

Allscripts share of the earnings of our equity method investees is reported based on a one quarter lag.

(2)

As noted below, effective June 2, 2016, Nant Health, LLC is no longer accounted for under the equity method.

Netsmart [Member]

Schedule of Consideration Funded by Sources of Funds

The consideration was funded by the sources of funds as described in the table below.

	(In thousands)
Cash contribution for redeemable convertible non-controlling interest in Netsmart - GI Partners	$	333,606
Exchange of Netsmart, Inc.'s common stock for redeemable convertible non-controlling interest in Netsmart - Netsmart, Inc. management		25,543
Cash contribution from borrowings under revolver in exchange for common stock in Netsmart - Allscripts		43,782
Net borrowings under new term loans - Netsmart		534,135
Total consideration for Netsmart, Inc.	$	937,066

Assets Acquired and Liabilities Assumed

The final allocation of the fair value of the consideration transferred, including measurement period adjustments through December 31, 2016, is shown in the table below.

	(In thousands)
Cash and cash equivalents	$	5,982
Accounts receivable, net		50,472
Prepaid expenses and other current assets		9,667
Fixed assets		26,829
Intangible assets		409,500
Goodwill		619,283
Other assets		6,540
Accounts payable		(14,151	)
Accrued expenses		(9,595	)
Deferred revenue		(18,843	)
Capital lease obligations		(17,833	)
Deferred taxes, net		(127,729	)
Other liabilities		(3,056	)
Net assets acquired	$	937,066

Acquired Intangible Assets Amortization

The acquired intangible assets are being amortized over their useful lives, using a method that approximates the pattern of economic benefits to be gained by the intangible asset and consist of the following amounts for each class of acquired intangible asset:

	Useful Life	Fair Value
Description	(In years)	(In thousands)
Technology	10	$	144,000
Corporate Trademark	indefinite		27,000
Product Trademarks	10		8,500
Customer Relationships	12-20		230,000
		$	409,500

HealthMEDX, LLC [Member]

Schedule of Consideration Funded by Sources of Funds

The aggregate consideration was funded by the sources of funds as shown in the table below and includes a contingent consideration payable to the HealthMEDX unitholders in 2018 of up to $3.5 million based on HealthMEDX achieving certain recurring revenue milestones in 2017. The fair value of such contingent consideration shown in the table below represents the maximum pay-out amount discounted at the weighted-average cost of capital rate used as part of the HealthMEDX valuation. The portion of the aggregate consideration that was paid in cash at closing was funded with borrowings under the Netsmart Credit Agreements.

	(In thousands)
Incremental term loan - Netsmart	$	36,195
Contingent consideration payable to former HealthMEDX owners		2,888
Deferred cash consideration		100
Total consideration for HealthMEDX, LLC	$	39,183

Assets Acquired and Liabilities Assumed

The allocation of the fair value of the consideration transferred as of the acquisition date of October 27, 2016 is shown in the table below. This allocation is preliminary and is subject to changes, which could be significant, as appraisals of tangible and intangible assets are finalized, and additional information becomes available:

	(In thousands)
Cash and cash equivalents	$	489
Accounts receivable, net		3,109
Prepaid expenses and other current assets		773
Fixed assets		603
Intangible assets		20,940
Goodwill		18,457
Other assets		45
Accounts payable		(703	)
Accrued expenses		(1,427	)
Deferred revenue		(1,792	)
Current maturities of capital lease obligations		(808	)
Long-term maturities of debt and capital lease obligations		(503	)
Net assets acquired	$	39,183

Acquired Intangible Assets Amortization

The following table summarizes the estimated fair values of HealthMEDX’s identifiable intangible assets and their estimated useful lives:

	Useful Life	Fair Value
Description	(In years)	(In thousands)
Technology	10	$	11,410
Product Trademarks	10		680
Customer Relationships	15		8,850
		$	20,940