Morning Commentary: Allscripts Healthcare convertibles in focus, contract post-earnings

By Abigail W. Adams

Portland, Me., Nov. 2 – Allscripts Healthcare Solutions Inc.’s 1.25% convertible notes due 2020 were the focus of trading activity early in Friday’s session with the notes contracting as stock tanked after the company released third-quarter earnings.

The 1.25% convertible notes were contracted about 1 point to 1.5 points on a dollar-neutral, or hedged, basis in active trading, a market source said.

The notes were trading around 97 on an outright basis after trading in the 103 range last week.

The majority of holders of the notes were outright accounts with the company a low vol. name, a source said.

“I’m sure some people are heading for the exit,” the source said.

While down dollar-neutral, the convertible notes have always traded rich. Despite the drop, the notes were still trading about 1.5 points rich, the source said.

Allscripts stock dropped more than 16% early Friday to $10.11 after the health care information technology company’s earnings miss.

Allscripts reported non-GAAP earnings per share of 18 cents for the third quarter versus analyst expectations of earnings per share of 20 cents.

Revenue for the third-quarter was $522.3 million versus analyst expectations for revenue of $549.4 million.

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