VERADIGM INC.
This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" section and other sections of this Quarterly Report on Form 10-Q
("Form 10-Q") contain forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, that involve risks and
uncertainties. Forward-looking statements provide current expectations of future
events based on certain assumptions and include any statement that does not
directly relate to any historical fact or pattern, including statements
regarding the potential impacts of the COVID-19 pandemic and steps we have taken
or plan to take in response thereto, statements related to the effect of
macroeconomic trends, statements regarding evolving patient care models,
statements regarding legislative, administrative and regulatory actions on our
business and opportunities related to accumulated patient data, and statements
regarding our expected future investment in research and development efforts.
Forward-looking statements can also be identified by the use of words such as
"future," "anticipates," "believes," "estimates," "expects," "intends," "plans,"
"predicts," "will," "would," "could," "can," "may," and similar terms.
Forward-looking statements are not guarantees of future performance. Actual
results could differ significantly from those set forth in the forward-looking
statements, and reported results should not be considered an indication of
future performance or events. Certain factors that could cause Allscripts actual
results to differ materially from those described in the forward-looking
statements include, but are not limited to: our ability to achieve the margin
targets associated with our margin improvement initiatives within the
contemplated time periods, if at all; the magnitude, severity and duration of
the COVID-19 pandemic, including the impacts of the pandemic, along with the
impacts of our responses and the responses by governments and other businesses
to the pandemic, on our business, our employees, our clients and our suppliers;
security breaches resulting in unauthorized access to our or our clients'
computer systems or data, including denial-of-services ransomware or other
Internet-based attacks; our use of the proceeds from the sale of our EPSi and
CarePort businesses; the failure by Practice Fusion to comply with the terms of
the settlement agreements with the Department of Justice ("DOJ"); the costs and
burdens of compliance by Practice Fusion with the terms of its settlement
agreements with the DOJ; additional investigations and proceedings from
governmental entities or third parties other than the DOJ related to the same or
similar conduct underlying the DOJ's investigations into Practice Fusion's
business practices; our ability to recover from third parties (including
insurers) any amounts paid in connection with Practice Fusion's settlement
agreements with the DOJ and related inquiries; the expected financial results of
businesses acquired by us; the successful integration of businesses recently
acquired by us; the anticipated and unanticipated expenses and liabilities
related to businesses acquired by us, including the civil investigation by the
U.S. Attorney's Office involving our Enterprise Information Solutions business;
our failure to compete successfully; consolidation in our industry; current and
future laws, regulations and industry initiatives; increased government
involvement in our industry; our or our customers' failure to see the benefits
of government programs; changes in interoperability or other regulatory
standards; our ability to maintain and expand our business with existing clients
or effectively transition clients to newer products; the effects of the
realignment of our sales, services and support organizations; market acceptance
of our products and services; the unpredictability of the sales and
implementation cycles for our products and services; our ability to manage
future growth; our ability to introduce new products and services; our ability
to establish and maintain strategic relationships; our ability to protect our
intellectual property rights; the outcome of legal proceedings involving us; our
ability to hire, retain and motivate key personnel; performance by our content
and service providers; liability for use of content; price reductions; our
ability to license and integrate third-party technologies; risks related to
international operations; changes in tax rates or laws; business disruptions;
our ability to maintain proper and effective internal controls; asset and
long-term investment impairment charges; and the other factors discussed in Part
I, Item 1A of our Annual Report on Form 10-K for the year ended December 31,
2020 (our "Form 10-K") under the heading "Risk Factors" and elsewhere. The
following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in Part I, Item 1,
"Financial Statements" in this Form 10-Q, as well as our Form 10-K filed with
the Securities and Exchange Commission (the "SEC"). We assume no obligation to
revise or update any forward-looking statements for any reason, except as
required by law.
Each of the terms "we," "us," "our," "Company," or "Allscripts" as used herein
refers collectively to
Overview
Our Business Overview and Regulatory Environment
We deliver information technology ("IT") solutions and services to help
healthcare organizations achieve optimal clinical, financial and operational
results. We sell our solutions to physicians, hospitals, governments, health
systems, health plans, life sciences companies, retail clinics, retail
pharmacies, pharmacy benefit managers, insurance companies, employer wellness
clinics and post-acute organizations, such as home health and hospice agencies.
We help our clients improve the quality and efficiency of health care with
solutions that include electronic health records ("EHRs"), information
connectivity, private cloud hosting, outsourcing, analytics, patient access and
population health management. We derive our revenues primarily from sales of our
proprietary software (either as a perpetual license sale or under a subscription
delivery model), support and maintenance services, and managed services, such as
outsourcing, private cloud hosting and revenue cycle management.
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Our solutions empower healthcare professionals with the data, insights and
connectivity to other caregivers they need to succeed in an industry that is
rapidly changing from fee-for-service models to fee-for-value advanced payment
models. We believe we offer some of the most comprehensive solutions in our
industry today. Healthcare organizations can effectively manage patients and
patient populations across all care settings using a combination of our
physician, hospital, health system, post-acute care and population health
management products and services. We believe these solutions will help transform
health care as the industry seeks new ways to manage risk, improve quality and
reduce costs.
Globally, healthcare providers face the urgency of the COVID-19 crisis, as well
as an aging population and the challenge of caring for an increasing number of
patients with chronic diseases. At the same time, practitioners worldwide are
also under growing pressure to demonstrate the delivery of high-quality care at
lower costs and to fully embrace expectations of efficient, patient-centered
information exchange. Congressional oversight of EHRs and health information
technology has increased in recent years. This increased oversight has impacted
and could continue to impact our clients and our business. The passage of the
21st Century Cures Act in December 2016 assuaged some concerns about
interoperability and possible U.S. Food and Drug Administration oversight of
EHRs, and the ensuing regulations on data blocking and interoperability were
released by the Department of Health and Human Services ("HHS") in March 2020
and became applicable under the Office of the National Coordinator for Health
Information Technology oversight in April 2021 . Additional regulatory clarity
will come with the final rule expected from the HHS Office of the Inspector
General . Some aspects of the new regulations will have a significant effect on
our business processes and how our clients must exchange patient information. In
particular, Allscripts will need to complete development work to satisfy the
revised and new certification criterion, and we and our clients will continue
making adjustments to business practices associated with information exchange
and provision of Electronic Health Information.
Please refer to the section entitled "Our Business Overview and Regulatory Environment" in Part II, Item 7 of our Form 10-K for additional information.
Impacts of COVID-19
The global outbreak of the novel coronavirus (COVID-19) has severely restricted the level of economic activity around the world, and the degrees of any economic recovery in various jurisdictions have not been linear. We have been carefully monitoring the COVID-19 pandemic and its impact on our global operations. We are conducting business with certain modifications to employee travel, employee work locations, and cost reduction initiatives, among other modifications. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, partners and stockholders.Allscripts , along with other health IT vendors, has been asked by theWhite House , HHS, theCDC , and state and local governments to support public health efforts to contain the pandemic by expanding COVID-19 reporting options available to our clients. Our technology has been instrumental to the provision of high-quality care, aiding not only public health surveillance but also in clinical decision support interventions to aid in triage, diagnosis and treatment; information exchange as patients are moved from site to site; predictive analytics based on local data for surge anticipation; and patient transitions as they leave the acute care environment for post-acute rehabilitative care. However, the COVID-19 pandemic negatively impacted revenue for the three months endedMarch 31, 2021 , as we saw delays in deals with upfront software revenue and professional services implementations across our inpatient and outpatient base. During 2020, we implemented cost reduction actions across all functional disciplines of the Company, including headcount reductions and temporary salary measures. We believe the cost reduction actions that were implemented in 2020 and our current liquidity provide us with operating and financial flexibility to assist us in navigating through this uncertain environment. The extent to which the COVID-19 pandemic will continue to impact the Company's results of operations and financial condition will depend on future developments that are highly uncertain and cannot be predicted. Future developments include new information that may emerge concerning the duration and severity of the COVID-19 pandemic, resurgences or additional "waves" of outbreaks of COVID-19 in various jurisdictions (including new strains or mutations of the virus), the impact of COVID-19 on economic activity, the actions taken by health authorities and policy makers to contain its impacts on public health and the global economy and the availability, effectiveness and public acceptance of vaccines.
Critical Accounting Policies and Estimates
There were no material changes to our critical accounting policies and estimates from those previously disclosed in our Form 10-K.
First Quarter 2021 Summary
During the first quarter of 2021, we continued to make progress on our key strategic, financial and operational imperatives, which are aimed at driving higher client satisfaction, increasing operating margins, improving our competitive position by expanding the depth and breadth of our products and integrating recent acquisitions. Additionally, we believe there are still opportunities to continue to improve our operating leverage and further streamline our operations and such efforts are ongoing.
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Total revenue for the first quarter of 2021 was $368 million , a decrease of $13
million compared to the first quarter of 2020. For the three months ended March
31, 2021 , software delivery, support and maintenance revenue and client services
revenue were $223 million and $146 million , respectively, compared with $232
million and $149 million , respectively, during the three months ended March 31,
2020 . Gross profit for the first quarter of 2021 was $150 million , an increase
of $18 million compared to the first quarter of 2020. Gross margin increased to
40.7% in the first quarter of 2021 compared to a 34.6% gross margin in the first
quarter of 2020.
Our contract backlog as of
Our bookings, which reflect the value of executed contracts for software, hardware, other client services, private cloud hosting, outsourcing and subscription-based services, totaled$194 million for the three months endedMarch 31, 2021 , which represents an increase of 6% over the comparable prior period amount of$183 million and an increase of 7% from the fourth quarter 2020 amount of$181 million .
Overview of Consolidated Results
Three Months EndedMarch 31, 2021 Compared with the Three Months EndedMarch 31, 2020 Three Months Ended March 31, (In thousands, except percentages) 2021 2020 % Change Revenue: Software delivery, support and maintenance$ 222,691 $ 232,140 (4.1 %) Client services 145,661 149,224 (2.4 %) Total revenue 368,352 381,364 (3.4 %) Cost of revenue: Software delivery, support and maintenance 70,731 73,084 (3.2 %) Client services 118,087 148,220 (20.3 %) Amortization of software development and acquisition-related assets 29,489 28,124 4.9 % Total cost of revenue 218,307 249,428 (12.5 %) Gross profit 150,045 131,936 13.7 % Gross margin % 40.7 % 34.6 % Selling, general and administrative expenses 81,708 92,825 (12.0 %) Research and development 49,173 59,377 (17.2 %) Amortization of intangible and acquisition-related assets 5,824 6,710 (13.2 %) Income (loss) from operations 13,340 (26,976 ) (149.5 %) Interest expense (3,143 ) (10,665 ) (70.5 %) Other income, net 1,037 522 98.7 % Equity in net income of unconsolidated investments 22 200 (89.0 %) Income (loss) from continuing operations before income taxes 11,256 (36,919 ) (130.5 %) Income tax (provision) benefit (2,663 ) 4,534 (158.7 %) Effective tax rate 23.7 % 12.3 % Income (loss) from continuing operations, net of tax 8,593 (32,385 ) (126.5 %) (Loss) income from discontinued operations (29 ) 16,218 (100.2 %) Gain on sale of discontinued operations 647 0 NM Income tax effect on discontinued operations (154 ) (4,187 ) (96.3 %) Income from discontinued operations, net of tax 464 12,031 (96.1 %) Net income (loss)$ 9,057 $ (20,354 ) (144.5 %) NM - We define "NM" as not meaningful for increases or decreases greater than 200%. Revenue Three Months Ended March 31, (In thousands) 2021 2020 % Change Revenue: Recurring revenue$ 295,648 $ 309,981 (4.6 %) Non-recurring revenue 72,704 71,383 1.9 % Total revenue$ 368,352 $ 381,364 (3.4 %) 28
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Three Months Ended
Recurring revenue consists of subscription-based software sales, support and maintenance revenue, recurring transactions revenue and recurring revenue from managed services solutions, such as outsourcing, private cloud hosting and revenue cycle management. Non-recurring revenue consists of perpetual software licenses sales, hardware resale and non-recurring transactions revenue, and project-based client services revenue. Recurring revenue decreased for the three months endedMarch 31, 2021 compared to the prior year comparable period, primarily due to attrition. The decrease was partially offset by an increase in subscription revenue. Non-recurring revenue increased for the three months endedMarch 31, 2021 compared to the prior year comparable period, primarily due to higher upfront software revenues and hardware revenues. The increase was partially offset by a decrease in client services revenue. The percentage of recurring and non-recurring revenue of our total revenue was 80% and 20%, respectively, during the three months endedMarch 31, 2021 and 81% and 19%, respectively, during the three months endedMarch 31, 2020 .
Gross Profit
Three Months Ended March 31,
(In thousands, except percentages) 2021 2020 % Change
Total cost of revenue $ 218,307 $ 249,428 (12.5 %)
Gross profit $ 150,045 $ 131,936 13.7 %
Gross margin % 40.7 % 34.6 %
Three Months Ended
Gross profit and margin increased during the three months endedMarch 31, 2021 compared with the prior year comparable period, primarily due to the cost reduction initiatives implemented throughout 2020. The increase was partially offset by attrition.
Selling, General and Administrative Expenses
Three Months Ended March 31,
(In thousands) 2021 2020 % Change
Selling, general and administrative expenses $ 81,708 $ 92,825 (12.0 %)
Three Months Ended
Selling, general and administrative expenses decreased during the three months endedMarch 31, 2021 , compared with the prior year comparable period, primarily due to the impact of the cost reduction initiatives implemented throughout 2020. Research and Development Three Months Ended March 31, (In thousands) 2021 2020 % Change Research and development$ 49,173 $ 59,377 (17.2 %)
Three Months Ended
Research and development expenses decreased during the three months endedMarch 31, 2021 compared with the prior year comparable period, primarily due to the impact of the cost reduction initiatives implemented throughout 2020.
Amortization of Intangible and Acquisition-related Assets
Three Months Ended March 31,
(In thousands) 2021 2020 % Change
Amortization of intangible and
acquisition-related assets $ 5,824 $ 6,710 (13.2 %)
Three Months Ended
The decrease in amortization expense for the three months endedMarch 31, 2021 , compared with the prior year comparable period, was due to normal amortization expense and certain intangible assets being fully amortized in 2020. Interest Expense Three Months Ended March 31, (In thousands) 2021 2020 % Change Interest expense$ 3,143 $ 10,665 (70.5 %) 29
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Three Months Ended
Interest expense decreased during the three months endedMarch 31, 2021 compared to the prior year comparable period due to lower outstanding debt levels during the current year period. The 1.25% Cash Convertible Senior Notes matured and were repaid in full in the third quarter of 2020. The senior secured credit facility was repaid in full in the fourth quarter of 2020 and there were no borrowings from the senior secured revolving facility ("Revolving Facility") during the three months endedMarch 31, 2021 . Other Income, Net Three Months Ended March 31, (In thousands) 2021 2020 % Change Other income, net$ 1,037 $ 522 98.7 %
Three Months Ended
Other income, net for the three months ended
Equity in Net Income of Unconsolidated Investments
Three Months Ended March 31,
(In thousands) 2021 2020 % Change
Equity in net income of unconsolidated
investments $ 22 $ 200 (89.0 %)
Three Months Ended
Equity in net income of unconsolidated investments represents our share of the equity earnings of our investments in third parties accounted for under the equity method of accounting based on a one quarter lag.
Income Taxes
Three Months Ended March 31,
(In thousands, except percentages) 2021 2020 % Change
Income tax (provision) benefit
23.7 % 12.3 %
Three Months Ended
Our provision for income taxes differs from the tax computed at theU.S. federal statutory income tax rate primarily due to permanent differences, income attributable to foreign jurisdictions taxed at different rates, state taxes, tax credits and certain discrete items. Our effective tax rate for the three months endedMarch 31, 2021 , compared with the prior year comparable period, differs primarily due to the fact that the permanent items, credits and the impact of foreign earnings had less impact on the pre-tax income of$11.3 million in the three months endedMarch 31, 2021 , compared to the impacts of these items on a pre-tax loss of$36.9 million for the three months endedMarch 31, 2020 . In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available evidence, including scheduled reversals of deferred tax liabilities, tax-planning strategies, and results of recent operations. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss). During the three months endedMarch 31, 2021 , we recorded valuation allowances of$0.2 million related toU.S. and foreign net operating loss carryforwards. Discontinued Operations Three Months Ended March 31, (In thousands) 2021 2020 % Change (Loss) income from discontinued operations$ (29 ) $ 16,218 (100.2 %) Gain on sale of discontinued operations 647 0
NM
Income tax effect on discontinued operations (154 ) (4,187 ) (96.3 %)
Income from discontinued operations, net of tax
(96.1 %)
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Three Months Ended
OnOctober 15, 2020 andDecember 31, 2020 , we completed the sale of the EPSi and CarePort businesses, respectively. Prior to the sale of EPSi, it was part of the Unallocated category as it did not meet the requirements to be a reportable segment nor the criteria to be aggregated into our two reportable segments. Prior to the sale of CarePort, it was part of the Data, Analytics and Care Coordination reportable segment. Both businesses were part of the same strategic initiative and were sold within the same period, and given that the combined sale of EPSi and CarePort represented a strategic shift that had a major effect on our operations and financial results, we reported them together as discontinued operations for all periods presented. The income from discontinued operations during the three months endedMarch 31, 2020 represents income generated from both EPSi and CarePort. The gain on sale of discontinued operations during the three months endedMarch 31, 2021 primarily represents net working capital adjustments to the gain from the sale of CarePort. Refer to Note 15, "Discontinued Operations" of the Notes to Consolidated Financial Statements in part I, Item 1 of this Form 10-Q for further information regarding discontinued operations. Segment Operations Overview of Segment Results Three Months Ended March 31, (In thousands) 2021 2020 % Change Revenue:
Core Clinical and Financial Solutions
Data, Analytics and Care Coordination 63,565 63,431
0.2 % Unallocated Amounts (4,378 ) (2,399 ) 82.5 % Total revenue$ 368,352 $ 381,364 (3.4 %) Gross Profit:
Core Clinical and Financial Solutions
Data, Analytics and Care Coordination 30,083 31,502 (4.5 %) Unallocated Amounts 0 0 NM Total gross profit$ 150,045 $ 131,936 13.7 %
Income (loss) from operations:
Core Clinical and Financial Solutions
Data, Analytics and Care Coordination 382 (6,264 ) (106.1 %)
Unallocated Amounts (4,647 ) 0
NM
Total income (loss) from operations
Core Clinical and Financial Solutions
Our Core Clinical and Financial Solutions segment derives its revenue from the
sale of software applications for patient engagement, integrated clinical and
financial management solutions, which primarily include EHR-related software,
financial and practice management software, related installation, support and
maintenance, outsourcing, private cloud hosting and revenue cycle management.
Three Months Ended March 31,
(In thousands, except percentages) 2021 2020 % Change
Revenue $ 309,165 $ 320,332 (3.5 %)
Gross profit $ 119,962 $ 100,434 19.4 %
Gross margin % 38.8 % 31.4 %
Income (loss) from operations $ 17,605 $ (20,712 ) (185.0 %)
Operating margin % 5.7 % (6.5 %)
Three Months Ended
Core Clinical and Financial Solutions revenue decreased during the three months endedMarch 31, 2021 , compared with the prior year comparable period, primarily due to attrition. Gross profit and margin increased during the three months endedMarch 31, 2021 , compared with the prior year comparable period, primarily due to the cost reduction initiatives implemented throughout 2020. The increase was partially offset by the previously mentioned attrition. 31 -------------------------------------------------------------------------------- Income from operations and operating margin increased for the three months endedMarch 31, 2021 , compared with the prior year comparable period, primarily due to lower operating expenses driven by the cost reduction initiatives implemented throughout 2020.
Data, Analytics and Care Coordination
Our Data, Analytics and Care Coordination segment derives its revenue from the
sale of practice reimbursement and payer and life sciences solutions, which are
mainly targeted at physician practices, payers, life sciences companies and
other key healthcare stakeholders. These solutions enable clients to transition,
analyze, coordinate care and improve the quality, efficiency and value of
healthcare delivery across the entire care community.
Three Months Ended March 31,
(In thousands, except percentages) 2021 2020 % Change
Revenue $ 63,565 $ 63,431 0.2 %
Gross profit $ 30,083 $ 31,502 (4.5 %)
Gross margin % 47.3 % 49.7 %
Income (loss) from operations $ 382 $ (6,264 ) (106.1 %)
Operating margin % 0.6 % (9.9 %)
Three Months Ended
Data, Analytics and Care Coordination revenue increased slightly for the three months endedMarch 31, 2021 compared with the prior year comparable period, due to an increase in subscription revenues. The increase was mostly offset by a decrease in transaction-related revenues. Gross profit and margin decreased slightly during the three months endedMarch 31, 2021 compared with the prior year comparable period, primarily due to higher capitalized software-related costs. Income from operations and operating margin increased during the three months endedMarch 31, 2021 compared with the prior year comparable period, primarily due to lower operating expenses driven by the cost reduction initiatives implemented throughout 2020. The increase was partially offset by a decline in gross profit. Unallocated Amounts
The "Unallocated Amounts" category consists of transfer pricing revenues and as
of
Three Months Ended March 31,
(In thousands, except percentages) 2021 2020 % Change
Revenue $ (4,378 ) $ (2,399 ) 82.5 %
Gross profit $ 0 $ 0 NM
Gross margin % 0.0 % 0.0 %
Loss from operations $ (4,647 ) $ 0 NM
Operating margin % 106.1 % 0.0 %
Three Months Ended
Revenue decreased during the three months ended
Loss from operations during the three months ended
Contract Backlog
Contract backlog represents the value of bookings and support and maintenance
contracts that have not yet been recognized as revenue. A summary of contract
backlog by revenue category is as follows:
% Change vs. March 31, 2021
As of As of As of
March 31, December March 31, December 31, March 31,
(In millions) 2021 31, 2020 2020 2020 2020
Software delivery, support
and maintenance $ 2,115 $ 2,153 $ 2,272 (1.8 %) (6.9 %)
Client services 1,923 1,918 1,905 0.3 % 0.9 %
Total contract backlog $ 4,038 $ 4,071 $ 4,177 (0.8 %) (3.3 %)
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-------------------------------------------------------------------------------- Total contract backlog as ofMarch 31, 2021 decreased compared withDecember 31, 2020 andMarch 31, 2020 . Total contract backlog can fluctuate between periods based on the level of revenue and bookings, as well as the timing and mix of renewal activity and periodic revalidations.
Liquidity and Capital Resources
The primary factors that influence our liquidity include, but are not limited to, the amount and timing of our revenues, cash collections from our clients, capital expenditures and investments in research and development efforts, including investments in or acquisitions of third parties, and divestitures. As ofMarch 31, 2021 , our principal sources of liquidity consisted of cash and cash equivalents of$515 million and available borrowing capacity of$899 million under our Revolving Facility. The change in our cash and cash equivalents balance is reflective of the following:
Operating Cash Flow Activities
Three Months Ended March 31,
(In thousands) 2021 2020 $ Change
Net income (loss) $ 9,057 $ (20,354 ) $ 29,411
Less: Income from discontinued operations 464 12,031 (11,567 )
Income (loss) from continuing operations
40,978
Non-cash adjustments to net income (loss) 58,354 61,490 (3,136 ) Cash impact of changes in operating assets and liabilities (11,036 ) (48,461 )
37,425
Net cash provided by (used in) operating
activities -
continuing operations 55,911 (19,356 )75,267
Net cash (used in) provided by operating
activities -
discontinued operations (51,336 ) 15,648 (66,984 )
Net cash provided by (used in) operating activities$ 4,575 $ (3,708 )
Three Months Ended
Net cash provided by operating activities - continuing operations increased during the three months endedMarch 31, 2021 compared with the prior year comparable period. The increase in net income (loss) for the three months endedMarch 31, 2021 reflects cost savings related to the cost reduction initiatives implemented throughout 2020 as well as lower interest expense due to the repayment of the 1.25% Cash Convertible Senior Notes and the senior secured credit facility in the third and fourth quarters of 2020, respectively, with no borrowings from the Revolving Facility in 2021. Net income (loss) and cash impact of changes in operating assets and liabilities for the three months endedMarch 31, 2020 reflects$57 million of payments related to the DOJ Settlement Agreements. The increase in cash impact of changes in operating assets and liabilities for the three months endedMarch 31, 2021 was partially offset by working capital changes. Non-cash adjustments to net income (loss) decreased primarily due to a lower depreciation and amortization expenses and a decrease in stock-based compensation expense. Net cash provided by operating activities - discontinued operations decreased during the three months endedMarch 31, 2021 compared with the prior year comparable period primarily due to the tax payment relating to the gain from the sale of CarePort onDecember 31, 2020 . Additionally, both EPSi and CarePort generated cash from operations during the three months endedMarch 31, 2020 .
Investing Cash Flow Activities
Three Months Ended March 31,
(In thousands) 2021 2020 $ Change
Capital expenditures $ (2,377 ) $ (2,777 ) $ 400
Capitalized software (18,144 ) (26,490 ) 8,346
Purchases of equity securities, other
investments and related intangible assets,
net (221 ) (3,028 ) 2,807
Sale of other investments 1,753 0 1,753
Net cash used in investing activities -
continuing operations (18,989 ) (32,295 ) 13,306
Net cash used in investing activities -
discontinued operations 0 (2,134 ) 2,134
Net cash used in investing activities
Three Months Ended
Net cash used in investing activities - continuing operations decreased during the three months endedMarch 31, 2021 , compared with the prior year comparable period. The decrease in the use of cash during 2021 was primarily due to a decrease in capitalized software costs and a decrease in additional investments. 33 -------------------------------------------------------------------------------- Net cash used in investing activities - discontinued operations during the three months endedMarch 31, 2020 reflects spending for capital expenditures and capitalized software costs related to the EPSi and CarePort businesses that were sold during the fourth quarter of 2020.
Financing Cash Flow Activities
Three Months Ended March 31,
(In thousands) 2021 2020 $ Change
Taxes paid related to net share settlement of
equity awards $ (5,972 ) $ (3,174 ) $ (2,798 )
Payments for issuance costs on 0.875%
Convertible Senior Notes 0 (758 ) 758
Credit facility payments 0 (80,000 )
80,000
Credit facility borrowings, net of issuance costs 0 210,000 (210,000 ) Repurchase of common stock 0 (9,714 )
9,714
Payment of acquisition and other financing obligations (1,542 ) (2,911 )
1,369
Net cash (used in) provided by financing activities$ (7,514 ) $ 113,443
Three Months Ended
Net cash provided by financing activities decreased during the three months
ended
Future Capital Requirements
The following table summarizes future payments under the 0.875% Convertible
Senior Notes and Revolving Facility as of
Remainder of
(In thousands) Total 2021 2022 2023 2024 2025 Thereafter
Principal payments:
0.875% Convertible
Senior Notes (1) $ 207,911 $ 0 $ 0 $ 0 $ 0 $ 0 $ 207,911
Total principal
payments 207,911 0 0 0 0 0 207,911
Interest payments:
0.875% Convertible
Senior Notes 10,915 910 1,819 1,819 1,819 1,819 2,729
Senior Secured Credit
Facility (2) 4,607 1,798 2,247 562 0 0 0
Total interest
payments 15,522 2,708 4,066 2,381 1,819 1,819 2,729
Total future debt
payments $ 223,433 $ 2,708 $ 4,066 $ 2,381 $ 1,819 $ 1,819 $ 210,640 (1) Amount represents the face value of the 0.875% Convertible Senior Notes,
which includes both the liability and equity portions.
(2) Amounts represent unused fees related to the unused available borrowing
capacity on the Revolving Facility.
Other Matters Affecting Future Capital Requirements
Our total investment in research and development is expected to decline in 2021 as the Company continues to benefit from margin improvement initiatives that commenced in 2020. Our total spending consists of research and development costs directly recorded to expense, which are offset by the capitalization of eligible development costs. We believe that our cash and cash equivalents of$515 million as ofMarch 31, 2021 , our future cash flows, our borrowing capacity under our Revolving Facility and access to capital markets, taken together, provide adequate resources to meet future operating needs as well as scheduled payments of short and long-term debt. We cannot provide assurance that our actual cash requirements will not be greater than we expect as of the date of this Form 10-Q. We will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies and the repurchase of our common stock under our stock repurchase program, each of which might impact our liquidity requirements or cause us to borrow under our Revolving Facility or issue additional equity or debt securities.
Contractual Obligations, Commitments and Off-Balance Sheet Arrangements
We have various contractual obligations, which are recorded as liabilities in our consolidated financial statements. During the three months endedMarch 31, 2021 , there were no material changes, outside of the ordinary course of business, to our contractual obligations and purchase commitments previously disclosed in our Form 10-K.
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