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HealthStreamUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017or☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 001-35547 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.(Exact name of registrant as specified in its charter) Delaware 36-4392754(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.)222 Merchandise Mart Plaza, Suite 2024, Chicago, IL 60654(Address of principal executive offices and zip code)(312) 506-1200(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class: Name of Each Exchange on which RegisteredCommon Stock, par value $0.01 per share The Nasdaq Stock Market LLC (Nasdaq Global Select Market)Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the precedingtwelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant based upon the closing sale price of the common stock onJune 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, was $2,265,556,247. Solely for purposes of this disclosure, shares of commonstock held by executive officers and directors of the registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executiveofficers and directors as affiliates is not necessarily a conclusive determination for any other purposes.As of February 21, 2018, there were 180,850,731 shares of the registrant’s common stock issued and outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement related to its 2018 annual meeting of stockholders (the “2018 Proxy Statement”) are incorporated by reference into PartIII of this Annual Report on Form 10-K where indicated. The 2018 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end ofthe fiscal year to which this report relates. ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.TABLE OF CONTENTS TOANNUAL REPORT ON FORM 10-KFOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 Item Page PART I 1. Business 31A. Risk Factors 131B. Unresolved Staff Comments 322. Properties 323. Legal Proceedings 324. Mine Safety Disclosures 324A. Executive Officers 32 PART II 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 346. Selected Financial Data 367. Management’s Discussion and Analysis of Financial Condition and Results of Operations 377A. Quantitative and Qualitative Disclosures About Market Risk 648. Financial Statements and Supplementary Data 659. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 1289A. Controls and Procedures 128 PART III 10. Directors, Executive Officers and Corporate Governance 12911. Executive Compensation 12912. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 12913. Certain Relationships and Related Transactions and Director Independence 12914. Principal Accountant Fees and Services 129 PART IV 15. Exhibits and Financial Statement Schedules 130 16. Form 10-K Summary 135 2 Each of the terms “we,” “us,” “our” or “company” as used herein refers collectively to Allscripts Healthcare Solutions, Inc. and its wholly-ownedsubsidiaries and controlled affiliates, unless otherwise stated.The “Business” section, the “Risk Factors” section, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”section and other sections of this Annual Report on Form 10-K (this “Form 10-K”) contain forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These forward-looking statements are based on the current beliefs and expectations of our management withrespect to future events and are subject to significant risks and uncertainties. Such statements can be identified by the use of words such as “future,”“anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “continue,” “can,” “may” and similar terms.Actual results could differ from those set forth in the forward-looking statements, and reported results should not be considered an indication of futureperformance. Certain factors that could cause our actual results to differ materially from those described in the forward-looking statements include, but arenot limited to, those discussed in Part I, Item 1A, “Risk Factors” of this Form 10-K, which are incorporated herein by reference. We do not undertake toupdate any forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements forany reason, except as required by law. PART I Item 1. BusinessAllscripts Healthcare Solutions, Inc. (“Allscripts”) delivers information technology (“IT”) solutions and services to help healthcare organizationsachieve optimal clinical, financial and operational results. Our solutions and services are sold to: •Physicians •Retail pharmacies •Hospitals •Pharmacy benefit managers •Governments •Insurance companies •Health systems •Employer wellness clinics •Health plans •Post-acute organizations •Life-sciences companies •Consumers •Retail clinics •Lab companiesOur portfolio, which we believe offers some of the most comprehensive solutions in our industry today, is designed to help clients advance thequality and efficiency of healthcare by providing electronic health records (“EHR”), financial management, population health management and precisionmedicine/consumer solutions. Built on an open integrated platform, Allscripts solutions enable users to exchange data, streamline workflows and leveragefunctionality from other software vendors. The Allscripts Developer Program focuses on nurturing partnerships with other developers to help clients optimizethe value of their Allscripts investment.During 2017, we completed the acquisition of McKesson’s hospital and health system business known as Enterprise Information Solutions (“EIS”)(the “EIS Business”). It expands our ability to meet the strategic needs of a broader range of hospitals and health systems, ranging from critical access andcommunity hospitals to the largest, most complex integrated delivery networks. We expect that our combined customer base will mutually benefit from theincreased breadth of the Allscripts portfolio. For example, clients of the EIS Business will benefit from our numerous solutions that are designed to help themstay ahead in the increasingly competitive environment in which they operate: precision medicine, cross community care coordination, consumer solutionsand financial analytics. 3 Allscripts also completed a transaction pursuant to which Allscripts exchanged its entire holdings of the NantHealth common stock for NantHealth’sprovider and patient engagement solutions business, including the FusionFX solution and components of NantOS software connectivity solutions. Inaddition, NantHealth amended its mutual license and reseller agreement with us to, among other things, commit to deliver a minimum dollar amount ofsoftware and related services from Allscripts over a 10-year period.Subsequent to December 31, 2017, we entered into a definitive agreement to acquire all of the issued and outstanding shares of capital stock ofPractice Fusion. Refer to Note 19, “Subsequent Events,” in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for furtherinformation about this agreement.Founded in 1986, Allscripts is incorporated in Delaware with principal executive offices located at 222 Merchandise Mart Plaza, Suite 2024,Chicago, Illinois 60654. Our principal website is www.allscripts.com. The contents of this website are not incorporated into this filing. Furthermore, ourreferences to the URLs for this website are intended to be inactive textual references only.SolutionsOur portfolio addresses a range of industry needs, with the goal of helping clients to connect communities across multiple care settings, encourageefficiency and deepen the engagement of the patient in his/her own care. Our principal solutions consist of the following:Electronic Health RecordsAllscripts offers a suite of EHRs for hospitals and health systems, as well as physician and community practices. Built on an open platform withadvanced clinical decision support, our EHRs provide analysis and insights. Each of our EHR offerings delivers a single patient record, workflows andconsolidated analytics. Our innovative technology-based solutions are designed to improve patient care delivery and outcomes. Our EHR solutions consistof the following:Sunrise Acute EHR is a comprehensive interdisciplinary clinical solution for larger hospital facilities with a combination of services lines. Thesolution—including Sunrise Ambulatory to support health systems on a single platform for both inpatient and outpatient care—provides decision guidance,including computerized provider order entry, note and flowsheet documentation, clinical summary views and other key workflows necessary for drivingquality care. Offerings include: •Sunrise Surgical Care •Sunrise Rehabilitation/Madonna •Sunrise Anesthesia •Sunrise Wound Care/TRUE-see •Sunrise Emergency Care •Sunrise Access Manager •Sunrise Pharmacy •Sunrise Hospital IQ •Sunrise Oncology •Sunrise Clinical Performance Management •Sunrise Laboratory •Sunrise Health Information Management •Sunrise Radiology •Sunrise Patient Administration System (international) Administrative and operational modules are likewise available. Functionality is also offered on mobile devices.Allscripts Paragon EHR is an integrated clinical, financial and administrative solution tailored for community hospitals and health systems. It ispart of the EIS portfolio that supports the full scope of care delivery and business processes, from patient access management and accounting through clinicalassessment, documentation and treatment. It offers integration with OneContent, an enterprise content management solution, to automate workflow acrossthe enterprise for all content types, such as documents and images.Allscripts TouchWorks EHR is designed for larger single and multispecialty practices and is built on an open platform that brings data sourcestogether. This open platform feature, along with the ability to customize workflows, allows clinical staff to effectively coordinate and deliver both primaryand specialized care. Functionality is also offered on mobile devices.Allscripts Professional EHR is for small- to mid-size physician practices. Allscripts Professional EHR works in Accountable Care Organizations(“ACOs”), Patient-Centered Medical Homes and Federally Qualified Health Centers, and enables practices to adhere to government initiatives likeMeaningful Use and the Medicare Access and CHIP Reauthorization Act.Modules available with TouchWorks and Professional EHRs include: •Allscripts eRecruit •Allscripts eChart Courier •Allscripts Clinical Performance Reporting •Allscripts iAssist •Allscripts Practice Management 4 Allscripts Payer & Life Sciences initiatives endeavor to optimize the value of our EHRs. We believe that a successful value-based care environmentrequires more efficient communication and collaboration among all stakeholders in the healthcare continuum. To that end, we collaborate with payers,providers, life-sciences companies, pharmacy benefit managers and other partners to develop new programs, processes and content to enhance clinicalsolutions and improve outcomes for patients. Data offerings from our providers enable payers and life-sciences organizations access to a real-world resourcefor research, insight and analysis. Programs include: •Patient Assistance and Adherence •Gaps-in-Care •Electronic Prior Authorization •Consumer Payment •Medical Record Abstraction •Clinical Trial Solutions Financial ManagementAllscripts financial solutions support revenue cycle, claims management, budgeting and analytic functions of a healthcare organization, amongothers. These tools can help change clinician behavior to improve patient flow, increase quality, advance outcomes, optimize referral networks, decreaseleakage and reduce costs. Plus, our solutions allow our clients to extract the data needed to support new reimbursement models. Offerings include: •Sunrise Financial Manager •Allscripts Revenue Cycle Management Services •Allscripts EPSi •Allscripts Payerpath •Allscripts STAR Population Health ManagementAllscripts CareInMotion™ is a community-connected population health management platform that delivers care coordination, patient engagement,connectivity, data aggregation and analytics. •Allscripts Care Coordination solution includes Allscripts Care Management, Allscripts Care Director, CarePort, dbMotion Care CoordinationAgent, Allscripts Referral Management and Chronic Care Management services. •Our Connectivity solution is enabled by our open infrastructure, featuring dbMotion Solution, dbMotion Community and Allscripts Fusion. •Patient Engagement is facilitated with Allscripts FollowMyHealth, FollowMyHealth TeleHealth and Remote Monitoring. Our patient engagementplatform also serves as the foundation for emerging consumer health initiatives. •Allscripts Population Health Analytics solution enables healthcare organizations to measure performance and outcomes, analyze utilization,manage risk, reduce cost and improve quality across the continuum of care. Precision Medicine/ Consumer Solutions 5 Through precision medicine, healthcare is evolving from a one-size-fits-all model to a personalized approach aimed at customizing diagnostic,therapeutic and preventive interventions. 2bPrecise™ solutions seek to bring the intelligence and insights of precision medicine to the workflow of theclinician — while making this knowledge available for research and pharmacogenomics.In 2017, Allscripts acquired NantHealth’s provider and patient engagement solutions business, including the FusionFX solutions and components ofNantOS software connectivity solutions. The FusionFX solutions improve the patient-clinician experience by bringing molecular medicine insights directlyto the point of care.ServicesIn addition to our solutions, Allscripts offers customizable professional and managed service offerings. From hosting, consulting, optimization andmanaged IT services to revenue cycle services for practices, Allscripts partners with clients to meet their goals. The following is a list of some of the serviceswe provide: •Allscripts Architecture Advisory Services •Hosting Solutions •Allscripts Comprehensive Care for Joint ReplacementConsulting •Managed Services: Application Management and Staff Augmentation •Allscripts Proactive Application Monitoring Service •Managed Services: IT Service Management (Full IT Outsourcing) •Assure •Managed Services: Managed Technology Deployment Model •Clinical Quality Program •Managed Services: Service Deck •Consulting: MU3 Readiness Assessment and Rapid DesignServices •Premier Support •Consulting: FollowMyHealth Engagement and Optimization •Revenue Cycle Consulting Services •Consulting: Patient-centered Medical Home •Security: Advanced Security Add On •Consulting: TouchWorks EHR Optimization •Sunrise Upgrade Center •Education Services: Experiential Learning •Support: Professional Safeguard •Education Services: Virtual Instructor-led Training •TouchWorks Multi-Year Subscription Upgrade Service 6 Our StrategyOur strategy is centered on the vision of enabling smarter care at virtually every point of the healthcare continuum. Given the breadth of our portfolioand global client installed base, we believe we are well positioned to connect physicians and caregivers to patients and payers across all healthcare settings.Smarter care is a strategic imperative for healthcare organizations globally and requires a balance between managing costs while maintaining the highestquality of care. We believe that our solutions are well-positioned to facilitate such transformation in the future of healthcare by offering communityconnectivity, interoperability, data analytics, and consumer engagement features and functionality. These key strategic areas all help healthcare providersbetter manage populations of patients, especially those with costly chronic conditions, such as diabetes, asthma, and heart disease, to help bring down thecost of care and improve patient outcomes. •Community Connectivity – Our care coordination solutions improve safety and quality as a patient transitions from one care setting toanother. We help build assessments, monitor results, track outcomes, and make modifications in a person’s care plan. Healthcare is a groupeffort, and having full visibility into a patient’s care plan is critical. Access to comprehensive patient information is key, and ourcommunity solutions help create an organized, longitudinal patient record spanning all points of care. •Interoperability – We employ a wide array of interoperability tools to support our clients’ desire to connect to numerous stakeholders inthe industry, including other healthcare providers, labs, imaging facilities, public health entities and patients, as well as other third-partytechnology providers. Our unique open platform is a proven, scalable and user-friendly technology that connects both clinical andfinancial data across every setting. We also offer Application Programming Interfaces (“APIs”) based on the Fast Healthcare InteroperabilityResources (FHIR). With this unique open platform, clients can connect to any certified application or device, which saves time and moneyand gives clients full access to a variety of innovative solutions. •Data Analytics – Healthcare organizations need to analyze dependencies, trends, and patterns so that they can develop business andclinical intelligence to better manage patient populations. Data-driven decisions require real-time, clean data for better decisions at thepoint of care. Insights and analytics serve as the foundation for informed analysis and effective planning. •Consumer Engagement – Our patient engagement software helps healthcare organizations achieve better outcomes, reduce emergencyroom visits, and decrease hospitalizations. Our software also integrates with solutions across an organization, regardless of a provider’ssoftware. With a patient engagement platform, individuals and their families have the opportunity to become active members of their careteam, which improves results. 7 Healthcare IT IndustryThe healthcare IT industry in which we operate is highly regulated and the services we provide are subject to a complex set of healthcare laws andregulations, among others, the Medicare Access and CHIP Reauthorization Act (“MARCA”), the Health Information Technology for Economic and ClinicalHealth Act (“HITECH”), the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), regulations issued by the Centers for Medicare andMedicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”), a number of fraud and abuse laws, including the federal Anti-Kickback Statute and the False Claims Act, and the Patient Protection and Affordable Care Act (as amended, the “PPACA”). In addition, the healthcare ITindustry is subject to changing political, legislative, regulatory, and other industry standards, which create both significant opportunities as well as certainchallenges. These include: •Provider Reimbursement: In recent years, there have been significant changes to provider payment models by the United States federalgovernment to move more towards a value-based care model that have been followed by commercial payers and state governments. This leads toincreasing pressure on healthcare organizations to reduce costs and increase quality, replacing fee-for-service models in part by expandingadvanced payment models. Such changes to provider payments models could further encourage the adoption of healthcare IT as a means ofimproving quality of patient care through increased efficiency, care coordination, and improving access to complete medical documentation. oThe passage of MACRA in 2015 codified the creation of new payment models, such as ACOs, that will significantly expand thenumber of ambulatory healthcare professionals delivering care under payment programs that are driven by quality measures currentlyunder development. Many of our clients are also involved with the Comprehensive Primary Care Plus program, which is workingtoward similar goals by emphasizing the role of the primary care provider. Another important driver of healthcare IT adoption in theprimary care space is the Patient Centered Medical Home program, a voluntary program in which many of our clients areparticipating and that has a strong emphasis on quality measurement and patient engagement. Even where some of these programswill likely be adjusted in part by HHS under the new presidential Administration, significant levels of reimbursements will stillrequire providers to capture, communicate, measure and share outcomes through technology solutions such as ours, given that thoserequirements are bound in federal statute. •HITECH: In 2009, the United States federal government enacted HITECH, which authorized the EHR Incentive program (the “meaningful use”program). This law provided significant incentive funding by the Medicare and Medicaid programs to physicians and hospitals that can provethey have adopted and are appropriately using technology such as our EHR solutions. CMS establishes and oversees the criteria that healthcareproviders must meet to receive HITECH stimulus funding, while the Office of the National Coordinator for Health Information Technology(“ONC”) establishes and oversees the functionality that EHR products must meet. In order for our customers to qualify for funding underHITECH, our technology must meet various requirements for product certification under the regulations, and must enable our customers toachieve “Meaningful Use” as defined under CMS regulations. CMS regulations provide for a phase approach to implementation of the“Meaningful Use” standards. For each stage, a final rule is implemented by the ONC to adopt an initial set of standards, implementationspecifications and certification criteria to enhance the use of health information technology and support its “Meaningful Use”. For providers toreceive “Meaningful Use” incentive funds, they must use EHRs that are certified according to regulations put forth by the ONC. Currently, ONCrecognizes a variety of Authorized Testing and Certification Bodies (“ATCBs”) eligible to test for and designate that EHRs are certified for“Meaningful Use” quality reporting. These ONC-ATCBs are the only organizations capable of designating that an EHR is certified for“Meaningful Use” incentive capture. •HIPAA: HIPAA and its implementing regulations contain substantial restrictions and requirements with respect to the use and disclosure ofindividuals’ protected health information. HIPAA applies to “Covered Entities,” such as certain healthcare providers, health plans, and healthcare clearinghouses, as well as business associates that performed functions on behalf of or provide services to Covered Entities. We considerourselves a Covered Entity due to our acting as a “healthcare clearinghouse” through our provision of Allscripts Payerpath due to its filing ofelectronic healthcare claims on behalf of healthcare providers that are subject to HIPAA and HITECH. In addition, as a result of our dealingswith certain clients and others in the healthcare industry, which may be considered Covered Entities under or otherwise subject to therequirements of HIPAA, we are, in some circumstances, considered a business associate under HIPAA. As a business associate, we are subject tothe HIPAA requirements relating to the privacy and security of protected health information. Among other things, HIPAA requires businessassociates to (i) maintain physical, technical and administrative safeguards to prevent protected health information from misuse, (ii) reportsecurity incidents and other inappropriate uses or disclosures of the information, including to individuals and governmental authorities, and (iii)assist Covered Entities from which we obtain health information with certain of their duties under HIPAA. We have policies and safeguards inplace intended to protect health information as required by HIPAA and have processes in place to assist us in complying with applicable lawsand regulations regarding the protection of this data and responding to any security incidents. •ANSI-5010/ICD-10: Under HIPAA, HHS implemented a new version of the standards for HIPAA-covered electronic 8 transactions, including claims, remittance advices, and requests and responses for eligibility, which are called ANSI-5010. Additionally, HIPAArequired entities to upgrade to the tenth revision of the International Statistical Classification of Diseases and Related Health Problems from theWorld Health Organization, also known as ICD-10, for use in reporting medical diagnoses and inpatient procedures by no later than October 1,2015. These changes in coding standards required our clients to upgrade to more advanced versions of our solutions. •Federal Anti-Kickback Statute: The federal Anti-Kickback Statute prohibits any person or entity from offering, paying, soliciting or receivinganything of value, directly or indirectly, for the referral of patients covered by Medicare, Medicaid and other federal healthcare programs or theleasing, purchasing, ordering or arranging for or recommending the lease, purchase or order of any item, good, facility or services covered bythese programs. Courts have interpreted the law to provide that a financial arrangement may violate this law if any one of the purposes of anarrangement is to encourage patient referrals or other federal healthcare program business, regardless of whether there are other legitimatepurposes for the arrangement. There are several limited exclusions known as safe harbors that may protect some arrangements from enforcementpenalties. Penalties for federal Anti-Kickback Statute violations can be severe, and include imprisonment, criminal fines, civil money penaltieswith triple damages (when the False Claims Act is implicated) and exclusion from participation in federal healthcare programs. The PPACAbroadened the reach of the fraud and abuse laws by, among other things, amending the intent requirement of the federal Anti-Kickback Statuteand the applicable criminal healthcare fraud statutes. Pursuant to the statutory amendment, a person or entity no longer needs to have actualknowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, PPACA provides that thegovernment may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a falseor fraudulent claim for purposes of the civil False Claims Act or the civil monetary penalties statute. Many states have adopted laws similar tothe federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, notonly the Medicare and Medicaid programs. •False Claims Act: The federal False Claims Act prohibits anyone from, among other things, knowingly presenting, or causing to be presented,for payment to federal programs (including Medicare and Medicaid) claims for items or services that are false or fraudulent. Although we wouldnot submit claims directly to payors, Allscripts could be held liable under the False Claims Act if they are deemed to “cause” the submission offalse or fraudulent claims by, for example, providing inaccurate billing or coding information to customers through our revenue cycle/claimsmanagement services, or if our EHR products are found to have caused providers to have inaccurately attested to Meaningful Use criteria. •PPACA: PPACA, which was signed into law in 2010, has impacted us and our clients. Since taking office, President Trump has continued tosupport the repeal of all or portions of the PPACA. As such, the PPACA may be repealed in part or in whole under the new presidentialadministration, but many components of the law, including those which have had a positive effect by requiring the expanded use of productssuch as ours to participate in certain federal programs, are expected to be included in any new legislation passed to replace it. Any provisions,such as those mandating reductions in reimbursement for certain types of providers or decreasing the number of covered lives in the UnitedStates or the depth of insurance coverage available to patients, may have a negative effect by reducing the resources available to our current andprospective clients to purchase our products. The repeal of, or any significant changes in, the incentive programs for Meaningful Use of EHRscould also reduce the resources or the incentive for customers to purchase our EHR products. Further, ambiguity remains for the industry as awhole regarding the future of many programs initially authorized by the PPACA, which may slow purchasing decisions as healthcareorganizations wait for clarity.We believe that these and other changes in laws and regulations, along with increasing pressure from private payers to move providers to quality-based payment programs and market opportunities to maximize the data that is increasingly being created and captured through the care process, willcontinue to drive adoption of healthcare IT products and services such as ours. For example, although many large physician groups have already purchasedEHR technology, we expect those groups may choose to replace their older EHR technology to comply with future Quality Payment Program requirementsand to add new features and functionality. Further, opportunities for healthcare provider organizations to expand their care coordination efforts in order tosuccessfully comply with new payment programs or to add software specific to the precision medicine expansion, as outlined in the 21st Century Cures Actpassed in December 2016, could lead to additional demand for our solutions. We also seek replacement markets for health information exchanges and patientportals, despite their recent deployment.Business OrganizationWe derive our revenues primarily from sales of our proprietary software (either as a direct license sale or under a subscription delivery model), whichalso serves as the basis for our recurring service contracts for software support and maintenance and certain transaction-related services. In addition, weprovide various other client services, including installation, and managed services such as outsourcing, private cloud hosting and revenue cyclemanagement. 9 During 2017, we completed the acquisitions of the EIS Business and NantHealth’s provider and patient engagement solutions business. Theseacquisitions initially resulted in the formation of four new operating segments: (i) EIS-Paragon, (ii) EIS-Enterprise Workflow Solutions (“EIS-EWS”), (iii) EIS-Classics and (iv) NantHealth. Refer to Note 2, “Business Combinations and Other Investments,” in Part II, Item 8, “Financial Statements and SupplementaryData” of this Form 10-K for further information about these acquisitions. The EIS-Paragon operating segment provides integrated EHR and revenue cyclemanagement solutions for the small hospital market segment and was integrated within our Hospitals and Health Systems operating segment during thefourth quarter of 2017. The EIS-EWS operating segment primarily provides document, content and supply chain management solutions. The EIS-Classicsoperating segment primarily provides revenue cycle management solutions. The NantHealth operating segment offers provider and patient engagementsolutions. Based on the qualitative and quantitative criteria under Accounting Standards Codification Topic 280, Segment Reporting, we concluded that theEIS-Classics operating segments can be included as part of the Clinical and Financial reportable segment, while the EIS-EWS and NantHealth operatingsegments can be included as part of the Population Health reportable segment. As a result, as of December 31, 2017, we identified ten operating segments,which were aggregated into three reportable segments: (i) Clinical and Financial Solutions, (ii) Population Health and (iii) Netsmart.Information regarding financial data by segment is set forth in Part II, Item 7 of this Form 10-K, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” and in Note 14, “Business Segments,” to our consolidated financial statements included in Part II, Item 8, “FinancialStatements and Supplementary Data” of this Form 10-K.ClientsAs of December 31, 2017, approximately 75,000 physician practices, 3,400 hospitals and 100,000 coordinated community care organizations use ourproducts and services. Our clients, which include some of the most prestigious medical groups and hospitals in the United States, often serve as referencesources for prospective clients that are interested in purchasing our solutions. No single client accounted for more than 10% of our revenue in the years endedDecember 31, 2017, 2016 and 2015.Research and DevelopmentRapid innovation characterizes the healthcare IT industry. We believe our ability to compete successfully depends heavily on our ability to ensure acontinual and timely flow of competitive products, services and technologies to the markets in which we operate.Because of this, we continue to invest heavily into our research and development efforts. These efforts are primarily focused on developing newsolutions as well as new features and enhancements to our existing solutions, which we believe will ensure that our solutions comply with continuallyevolving regulatory requirements and create additional opportunities to connect our systems to the healthcare community.Our total gross research and development spending was $359.1 million, $290.4 million and $234.1 million for the years ended December 31, 2017,2016 and 2015, respectively. These amounts consist of research and development expenses of $220.2 million, $187.9 million and $184.8 million, andcapitalized software development costs of $138.9 million, $102.5 million and $49.3 million, for each of these periods respectively. We expense research anddevelopment expenses as incurred, and we capitalize software development costs incurred from the time technological feasibility of the software isestablished, or when the preliminary project phase is completed in the case of internal use software, until the software is available for general release. Non-capitalizable research and development costs and other software maintenance costs are expensed as incurred. 10 CompetitionThe markets for our solutions and services are highly competitive, and are characterized by rapidly evolving technology and solution standards anduser needs, as well as frequent introduction of new solutions and services. Some of our competitors may be more established, benefit from greater namerecognition, and have substantially greater financial, technical, and marketing resources than we do.Additionally, many of our prospective clients have invested substantial personnel and financial resources to implement and integrate competingsolutions to ours. As a consequence, they may be reluctant or unwilling to migrate to our solutions. Third-party developers may be reluctant to buildapplication services on our platform since they have invested in other competing technology platforms.We compete primarily with numerous types of organizations, including developers of revenue cycle and practice management software and services,large system integrators, IT service providers, ambulatory and acute care EHR solutions, population health management and value-based care technologies,analytics systems, care management solutions and post-acute solutions. We generally compete on the basis of several factors, including breadth and depth ofservices (including our open architecture and the level of solution integration across care settings), integrated platform, regulatory compliance, reputation,reliability, accuracy, security, client service, total cost of ownership, innovation and industry acceptance, expertise and experience.Moreover, we expect that competition will continue to increase as a result of consolidation in both the IT and healthcare industries. If one or more ofour competitors or potential competitors were to merge or partner with another of our competitors, the change in the competitive landscape could adverselyaffect our ability to compete effectively.Our principal existing competitors in these markets include, but are not limited to (in alphabetical order) AdvancedMD, athenahealth Inc., CernerCorporation, Change Healthcare, CPSI (Computer Programs and Systems Inc.), CureMD Healthcare, eClinicalWorks, Enli Health Intelligence, Epic SystemsCorporation, Evolent Health, GE Healthcare, Greenway Medical Technologies, Harris Healthcare, Healthagen, Health Catalyst, Homecare Homebase (part ofHearst Health network), IBM Watson Health, IQVIA, Kareo, MEDHOST, Inc., Meditech (Medical Information Technology, Inc.), Navicure/Zirmed,NaviHealth (a Cardinal Health company), nThrive, Optum, Philips Wellcentive, Premier Inc., Quadramed, Quality Systems, Inc., Roper Industries, T-System,The TriZetto Group, Inc. (a division of Cognizant Technology Solutions, Inc.) and Wellsoft Corporation. BacklogWe had a contract backlog of $4.6 billion and $4.1 billion as of December 31, 2017 and 2016, respectively, an increase of $500 million or 12%.Contract backlog represents the value of bookings and support and maintenance contracts that have not yet been recognized as revenue. Total contractbacklog increased primarily due to an increase in bookings related to subscription-based agreements and managed services, such as outsourcing, privatecloud hosting and revenue cycle management. We estimate that approximately 38% of our aggregate contract backlog as of December 31, 2017 will berecognized as revenue during 2018.Intellectual PropertyWe rely on a combination of trademark, copyright, trade secret and patent laws in the United States and other jurisdictions, as well as confidentialityprocedures and contractual provisions to protect our proprietary technology and our brand. We also enter into confidentiality and proprietary rightsagreements with our employees, consultants and other third parties and control access to software, documentation and other proprietary information.Many of our products include intellectual property obtained from third parties. For example: •Many of our products are built on technology provided by Microsoft Corporation, such as the Microsoft SQL Server information platform,the Microsoft .NET Framework and the Microsoft Azure cloud platform. •We license content from companies such as OptumInsight, 3M Health Information Systems, Wolters Kluwer Health, Elsevier, IMO andClinical Architecture, which we incorporate or use in certain solutions. 11 It may be necessary in the future to seek or renew licenses relating to various aspects of our products and services. While we have generally been ableto obtain licenses on commercially reasonable terms in the past, there is no guarantee that we can obtain such licenses in the future on reasonable terms or atall. Because of continuous healthcare IT innovation, current extensive patent coverage and the rapid rate of issuance of new patents, it is possible that certaincomponents of our solutions may unknowingly infringe upon an existing patent or other intellectual property rights of others. Occasionally, we have beennotified that we may be infringing certain patent or other intellectual property rights of third parties. While the outcome of any litigation or dispute isuncertain, we do not believe that the resolution any of these infringement notices will have a material adverse impact on our business.Geographic InformationHistorically, the majority of our clients and revenue have been associated with North America, where we have clients in the United States and Canada.While we remain focused on the North American market, which we expect will continue to drive our revenue in the future, we believe that there areopportunities for us globally as other countries face similar challenges of controlling healthcare costs while improving the quality and efficiency ofhealthcare delivery. As a result, we have increased our efforts to selectively expand the sales of many of our solutions outside of North America, primarily inthe United Kingdom, the Middle East, Asia and Australia.During the year ended December 31, 2017, our domestic and international sales accounted for 97% and 3%, respectively, of our total revenue.Information regarding financial data by geographic segment is set forth in Note 16, “Geographic Information,” to our consolidated financial statementsincluded in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.EmployeesAs of December 31, 2017, we had approximately 8,900 employees worldwide. None of our employees are covered by a collective bargainingagreement or are represented by a labor union. The increase over December 31, 2016 was due primarily to the acquisition of the EIS business.Available InformationCopies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuantto Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S. Securities and ExchangeCommission (the “SEC”). We are subject to the informational requirements of the Exchange Act and we file or furnish reports, proxy statements and otherinformation with the SEC. Such reports and information are available free of charge at our website at investor.allscripts.com as soon as reasonably practicablefollowing our filing of any of these reports with the SEC. The public may read and copy any materials filed by us with the SEC at the SEC’s Public ReferenceRoom at 100 F Street, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling theSEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuersthat file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Furthermore, our references to theURLs for these websites are intended to be inactive textual references only. 12 Item 1A. Risk FactorsOur business, financial condition, operating results and stock price can be materially and adversely affected by a number of factors, whethercurrently known or unknown, including, but not limited to, those described below. Any one or more of such factors, some of which are outside of our control,could directly or indirectly cause our actual financial condition and operating results to vary materially from our past or anticipated future financialcondition or operating results.Because of the following factors, as well as other factors affecting our financial condition and operating results, past financial performance shouldnot be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.These risk factors may be important to understanding any statement made by us in this Form 10-K or elsewhere. The following information should beread in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidatedfinancial statements and related notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.Risks Related to Our IndustryMarkets for our products and services are highly competitive and subject to rapid technological change, and we may be unable to compete effectively inthese markets.The markets for our products and services are intensely competitive and are characterized by rapidly evolving technology, solution standards and userneeds and the frequent introduction of new products and services. There can be no assurance that we capture additional opportunities in the replacementmarket. Some of our competitors may be more established, benefit from greater name recognition and have substantially greater financial, technical andmarketing resources than us. Moreover, we expect that competition will continue to increase as a result of potential incentives provided by governmentprograms and as a result of consolidation in both the IT and healthcare industries. If one or more of our competitors or potential competitors were to merge orpartner with another of our competitors, the change in the competitive landscape could adversely affect our ability to compete effectively.We compete on the basis of several factors, including: •breadth and depth of services, including our open architecture and the level of product integration across care settings; •integrated platform; •regulatory compliance; •reputation; •reliability, accuracy and security; •client service; •total cost of ownership; •innovation; and •industry acceptance, expertise and experience.There can be no assurance that we will be able to compete successfully against current and future competitors or that the competitive pressures that weface will not materially and adversely impact our business, financial condition and operating results. 13 Consolidation in the healthcare industry could adversely impact our business, financial condition and operating results.Many healthcare provider organizations are consolidating to create integrated healthcare delivery systems with greater market power. As providernetworks and managed care organizations consolidate, thus decreasing the number of market participants, competition to provide products and services likeours will become more intense, and the importance of establishing and maintaining relationships with key industry participants will increase. These industryparticipants may try to use their market power to negotiate price reductions for our products and services. Further, consolidation of management and billingservices through integrated delivery systems may decrease demand for our products. Such consolidation may also lead integrated delivery systems to requirenewly acquired physician practices to replace their current Electronic Health Record, such as an Allscripts product, with that already in use in the largerenterprise. Any of these factors could materially and adversely impact our business, financial condition and operating results.We are subject to a number of existing laws, regulations and industry initiatives and we are susceptible to a changing regulatory environment.As a participant in the healthcare industry, our operations and relationships, and those of our clients, are regulated by a number of federal, state andlocal governmental entities. The impact of this regulation on us is direct, to the extent we are ourselves subject to these laws and regulations, and is alsoindirect, both in terms of the level of government reimbursement available to our clients and in that, in a number of situations, even if we are not directlyregulated by specific healthcare laws and regulations, our products must be capable of being used by our clients in a manner that complies with those lawsand regulations. The ability of our clients to comply with laws and regulations while using our solutions could affect the marketability of our products or ourcompliance with our client contracts, or even expose us to direct liability under the theory that we had assisted our clients in a violation of healthcare laws orregulations. Because our business relationships with physicians, hospitals and other provider clients are unique and the healthcare IT industry as a whole isrelatively young, the application of many state and federal regulations to our business operations and to our clients is uncertain. In the United States, thereare federal and state privacy and security laws; fraud and abuse laws, including anti-kickback laws and limitations on physician referrals; numerous qualitymeasurement programs being adopted by our clients; and laws related to distribution and marketing, including off-label promotion of prescription drugs,which may be directly or indirectly applicable to our operations and relationships or the business practices of our clients. It is possible that a review of ourbusiness practices or those of our clients by courts or regulatory authorities could result in a determination that could adversely affect us. Furthermore, as weexpand our business globally, we become subject to comparable laws and regulations in each non-United States jurisdiction in which we operate, whichcreates additional risks. See the risk factor entitled “Our business is subject to the risks of global operations” below for more information.In addition, the healthcare regulatory environment may change in a way that restricts our existing operations or our growth. The healthcare industrygenerally and the EHR industry specifically are expected to continue to undergo significant legal and regulatory changes for the foreseeable future, whichcould have an adverse effect on our business, financial condition and operating results. We cannot predict the effect of possible future enforcement,legislation and regulation.Specific risks include, but are not limited to, risks relating to:Healthcare Fraud. Federal and state governments continue to enhance regulation of and increase their scrutiny over practices involving healthcarefraud perpetrated by healthcare providers and professionals whose services are reimbursed by Medicare, Medicaid and other government healthcare programs.The healthcare industry is subject to laws and regulations on fraud and abuse which, among other things, prohibit the direct or indirect payment or receipt ofany remuneration for patient referrals, or for the purchase or order, or arranging for or recommending referrals or purchases, of any item or service paid for inwhole or in part by these federal or state healthcare programs. Federal enforcement personnel have substantial funding, powers and remedies to pursuesuspected or perceived fraud and abuse. Moreover, both federal and state laws forbid bribery and similar behavior. Any determination by a regulatory,prosecutorial or judicial authority that any of our activities involving our clients, vendors or channel partners violate any of these laws could subject us tocivil or criminal penalties, require us to change or terminate some portions of our business, require us to refund a portion of our license or service fees anddisqualify us from providing services to clients doing business with government programs, all of which could have a material adverse effect on our business,financial condition and operating results. Even an unsuccessful challenge by regulatory or prosecutorial authorities of our activities could result in adversepublicity, require a costly response from us and have a material adverse effect on our business, financial condition and operating results. 14 Patient Information. As part of the operation of our business, we, and our subcontractors may have access to, or our clients may provide to us,individually-identifiable health information related to the treatment, payment and operations of providers’ practices. In the United States, government andindustry legislation and rulemaking, especially HIPAA, HITECH and standards and requirements published by industry groups such as the Joint Commissionrequire the use of standard transactions, standard identifiers, security and other standards and requirements for the transmission of certain electronic healthinformation. National standards and procedures under HIPAA include the “Standards for Electronic Transactions and Code Sets” (the “TransactionStandards”); the “Security Standards” (the “Security Standards”); and the “Standards for Privacy of Individually Identifiable Health Information” (the“Privacy Standards”). The Transaction Standards require the use of specified data coding, formatting and content in all specified “HealthCare Transactions”conducted electronically. The Security Standards require the adoption of specified types of security measures for certain electronic health information, whichis called Protected Health Information (“PHI”). The Privacy Standards grant a number of rights to individuals as to their PHI and restrict the use and disclosureof PHI by “Covered Entities,” defined as “health plans,” “healthcare providers,” and “healthcare clearinghouses.” Entities that perform services to or onbehalf of Covered Entities where PHI is or is likely to be accessed are called Business Associates.We believe we are a Covered Entity due to our acting as a “healthcare clearinghouse” through our provision of Allscripts Payerpath due to its filing ofelectronic healthcare claims on behalf of healthcare providers that are subject to HIPAA and HITECH. We also believe that in certain business relationshipswe are a Business Associate. The 2013 modifications to the HIPAA Privacy, Security, Breach Notification, and Enforcement Rules impose additionalobligations and burdens on Covered Entities, Business Associates and their subcontractors relating to the privacy and security of PHI. Much of the PrivacyStandards and all of the Security Standards now apply directly to Business Associates and their subcontractors. These new rules may increase the cost ofcompliance and could subject us to additional enforcement actions, which could further increase our costs and adversely affect the way in which we dobusiness.In addition, certain provisions of the Privacy Standards and Security Standards apply to Business Associates when they create, access or receive PHI inorder to perform a function or activity on behalf of a Covered Entity. Covered Entities and Business Associates must enter a written “Business AssociateAgreement”, containing specified written satisfactory assurances, consistent with the Privacy and Security Standards and HITECH and its implementingregulations, that the third party will safeguard PHI that it creates or accesses and will fulfill other material obligations. Most of our clients are CoveredEntities, and we and our subcontractors function in many of our relationships as a Business Associate of those clients. Under the HIPAA Omnibus Rule,Business Associates may be held directly liable for violations of HIPAA. Therefore, we could face liability under our Business Associate Agreements andHIPAA and HITECH if we do not comply with our Business Associate obligations and applicable provisions of the Privacy and Security Standards andHITECH and its implementing regulations. The penalties for a violation of HIPAA or HITECH are significant and could have an adverse impact upon ourbusiness, financial condition and operating results, if such penalties ever were imposed.Subject to the discussion set forth above, we believe that the principal effects of HIPAA are, first, to require that our systems be capable of beingoperated by us and our clients in a manner that is compliant with the Transaction, Security and Privacy Standards, second, to require us to enter into andcomply with Business Associate Agreements with our Covered Entity clients, and third, to comply with HIPAA when it directly applies to us. For mostCovered Entities, the deadlines for compliance with the Privacy Standards and the Transaction Standards occurred in 2003, and for the Security Standards in2005, and for the HIPAA Omnibus Rule in 2013.Additionally, Covered Entities that are providers are required to adopt a unique standard National Provider Identifier (“NPI”), for use in filing andprocessing healthcare claims and other transactions. Most Covered Entities were required to use NPIs in standard transactions by 2007. We have policies andprocedures that we believe comply with federal and state confidentiality requirements for the handling of PHI that we receive and with our obligations underBusiness Associate Agreements. In particular, we believe that our systems and products are operated by us and capable of being used by our clients incompliance with the Transaction, Security and Privacy Standards and are capable of being used by or for our clients in compliance with the NPI requirements.If, however, we or our subcontractors, do not follow those procedures and policies, or they are not sufficient to prevent the unauthorized disclosure of PHI, wecould be subject to civil and/or criminal liability, fines and lawsuits, termination of our client contracts or our operations could be shut down. Moreover,because all HIPAA Standards and HITECH implementing regulations and guidance are subject to change or interpretation, we cannot predict the full futureimpact of HIPAA, HITECH or their implementing regulations on our business and operations. In the event that HIPAA, HITECH or their implementingregulations change or are interpreted in a way that requires any material change to the way in which we do business, our business, financial condition andoperating results could be adversely affected. Additionally, certain state privacy laws are not preempted by HIPAA and HITECH and may imposeindependent obligations upon our clients or us. Additional legislation governing the acquisition, storage and transmission or other dissemination of healthrecord information and other personal information, including social security numbers and other identifiers, continues to be proposed and come into force atthe state level. There can be no assurance that changes to state or federal laws will not materially restrict the ability of providers to submit information frompatient records using our products and services. 15 Electronic Prescribing. The use of our software by physicians to perform a variety of functions, including electronic prescribing, which refers to theelectronic routing of prescriptions to pharmacies and the ensuing dispensation, is governed by state and federal law, including fraud and abuse laws. Stateshave differing prescription format requirements, which we have programmed into our software. There is significant variation in the laws and regulationsgoverning prescription activity, as federal law and the laws of many states permit the electronic transmission of certain controlled prescription orders, whilethe laws of several states neither specifically permit nor specifically prohibit the practice. Restrictions exist at the federal level on the use of electronicprescribing for controlled substances and certain other drugs, including a regulation enacted by the Drug Enforcement Association in mid-2010. However,some states (most notably New York) have passed complementary laws governing the use of electronic prescribing tools in the use of prescribing opioids andother controlled substances, and we expect this to continue to be addressed with regulations in other states in the near future. In addition, the HHS publishedits final “E-Prescribing and the Prescription Drug Program” regulations in 2005 (effective January 1, 2006), and final regulations governing the standards forelectronic prescribing under Medicare Part D in 2008 (effective June 6, 2008) (the “ePrescribing Regulations”). These regulations are required by theMedicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) and consist of detailed standards and requirements, in addition to theHIPAA Standard discussed above, for prescription and other information transmitted electronically in connection with a drug benefit covered by the MMA’sPrescription Drug Benefit. Further, in 2016, Congress passed the Comprehensive Addiction and Recovery Act, which contained components related toPrescription Drug Monitoring Programs and other elements that relate to use of our technologies.Incentive programs to drive certain usage patterns of our solutions by eligible professionals began to increase in number starting in 2008 with theMedicare Improvements for Patients and Providers Act (“MIPPA”), which authorized payments to individual prescribers who were successful electronicprescribers, and the quality reporting incentive program that is now known as the Physician Quality Reporting System (“PQRS”). Both programs remained ineffect for 2015, with both applying payment adjustments to non-participating providers. Beginning in 2009, HITECH’s EHR Incentive Program (also knownas Meaningful Use) became the most prominent incentive program, reducing the impact the MIPPA and PQRS programs had in spurring greater adoption ofhealthcare IT. In 2016, CMS issued preliminary regulations for the Quality Payment Program (“QPP”), which implements the Medicare Access and CHIPReauthorization Act (“MACRA”); for ambulatory clinicians, this further replaces the impact of MIPPA. In general, regulations in this area impose certainrequirements which can be burdensome and evolve regularly, meaning that any potential benefits may be reversed by a newly-promulgated regulation thatadversely affects our business model. Aspects of our clinical products are affected by such regulation because of our need to include features or functions inour products to achieve certification, as well as the need of our clients to comply, as discussed above, and we expect this will continue for the foreseeablefuture.We also are subject, as discussed above, to future legislation and regulations concerning the development and marketing of healthcare softwaresystems or requirements related to product functionality. These could increase the cost and time necessary to market new services and could affect us in otherrespects not presently foreseeable.Electronic Health Records. A number of important federal and state laws govern the use and content of EHRs, including fraud and abuse laws thatmay affect the donation of such technology. As a company that provides EHRs to a variety of providers of healthcare, our systems and services must bedesigned in a manner that facilitates our clients’ compliance with these laws. We cannot predict the content or effect of possible changes to these laws or newfederal and state laws that might govern these systems and services. Furthermore, several of our products are certified by an Office of the National Coordinatorfor Health Information Technology-approved certifying body as meeting the standards for functionality, interoperability and security under HITECH. Ourfailure to maintain this certification or otherwise meet industry standards could adversely impact our business.Under HITECH, eligible healthcare professionals and hospitals have been able to qualify for an additional Medicare and Medicaid payment for the“Meaningful Use” of certified EHR technology that meets specified objectives under the EHR Incentive program. Many of our products have been certifiedas compliant EHRs or modules, in accordance with the applicable certification criteria set forth by the Secretary of HHS, including the 2015 EHRCertification Edition criteria (the “2015 Edition”). Such certification does not represent an endorsement of our products or modules by HHS or a guaranty ofthe receipt of incentive payments by our clients. If our clients do not receive or lose expected incentive payments, this could harm their willingness topurchase future products or upgrades, and therefore could have an adverse effect on our future revenues. 16 On October 6, 2015, CMS published its final rule on Stage 3 of the Meaningful Use Requirements for the Electronic Health Record IncentiveProgram. Stage 3 objectives are focused on improving the interoperability of HER systems in different practices and are intended to bring aboutadvancements in care delivery by requiring more advanced HER functionality and standards for structuring data, increasing thresholds compared to Stage 1and 2 measures, and requiring more coordinated care and patient engagement. New, complex regulatory requirements related to Stage 3 “Meaningful Use”certification and voluntary regulations were released within the 2015 Edition criteria. All providers will be required to meet the Stage 3 objectives in 2018for the entire calendar year in order to attest to Meaningful Use, and our failure to cause our products to maintain the applicable certifications could put us ata disadvantage to our competitors’ products. The rules associated with the third stage of Meaningful Use were adjusted for some but not all of our clientsthrough the process of promulgating regulations associated with the MACRA, adding complexity as we now work to support the two different programs.Going forward, if the two separate programs with different requirements remain in place, it may lead to challenges with development and deployment toclients similar to what was experienced by the industry in 2014. We may incur additional costs in designing new upgrades and products and redesigningexisting products to comply with these new requirements, which could also divert resources from our other research and development priorities.The MACRA and resulting regulations are also anticipated to lead our clients to request advanced quality measurement and analytic functionalitywithin our products in order to be able to participate in the new payment models that will be launched (Merit-based Incentive Payment System and AdvancedAlternative Payment Models). Similar programs have also been created and are being expanded by commercial payers and non-governmental organizations,such as the National Committee for Quality Assurance, which oversee the Patient Centered Medical Home initiatives. The related product requirements arecontinually evolving and are not coordinated by these parties amongst themselves, which could cause us to expend additional resources to assist our clients.Claims Transmission. Our system electronically transmits medical claims by physicians to patients’ payers for approval and reimbursement. Inaddition, we offer revenue cycle management services that include the manual and electronic processing and submission of medical claims by physicians topatients’ payers for approval and reimbursement. Federal law provides that it is both a civil and a criminal violation for any person to submit, or cause to besubmitted, a claim to any payer, including, without limitation, Medicare, Medicaid and all private health plans and managed care plans, seeking payment forany services or products that overbills or bills for items that have not been provided to the patient. We have in place policies and procedures that we believeassure that all claims that are transmitted by our system and through our services are accurate and complete, provided that the information given to us by ourclients is also accurate and complete. If, however, we or our subcontractors do not follow those procedures and policies, or they are not sufficient to preventinaccurate claims from being submitted, we could be subject to liability.As discussed above, the HIPAA Transaction and Security Standards also affect our claims transmission services, since those services must be structuredand provided in a way that supports our clients’ HIPAA compliance obligations. Furthermore, to the extent that there is some type of information securitybreach, it could have a material adverse effect on our business.Medical Devices. Certain computer software products are regulated as medical devices under the Federal Food, Drug and Cosmetic Act. The 21stCentury Cures Act passed in December 2016, clarified the definition of a medical device to exclude health information technology such as Electronic HealthRecords; however, the legislation did leave the opportunity for that designation to be revisited if determined to be necessary by changing industry andtechnological dynamics. Accordingly, the Food and Drug Administration (the “FDA”) may become increasingly active in regulating computer softwareintended for use in healthcare settings. Depending on the product, we could be required to notify the FDA and demonstrate substantial equivalence to otherproducts on the market before marketing such products or obtain FDA approval by demonstrating safety and effectiveness before marketing a product.Depending on the intended use of a device, the FDA could require us to obtain extensive data from clinical studies to demonstrate safety or effectiveness orsubstantial equivalence. If the FDA requires this data, we could be required to obtain approval of an investigational device exemption before undertakingclinical trials. Clinical trials can take extended periods of time to complete. We cannot provide assurances that the FDA would approve or clear a device afterthe completion of such trials. In addition, these products would be subject to the Federal Food, Drug and Cosmetic Act’s general controls. The FDA canimpose extensive requirements governing pre- and post-market conditions such as approval, labeling and manufacturing, as well as governing product designcontrols and quality assurance processes. Failure to comply with FDA requirements can result in criminal and civil fines and penalties, product seizure,injunction and civil monetary policies—each of which could have an adverse effect on our business. 17 Health Reform. The activity related to the repeal, repair and/or replacement of the Patient Protection and Affordable Care Act (“PPACA”), includingany changes resulting from continued judicial and congressional challenges to certain aspects of the law, and the 2015 repeal of the Sustainable Growth Rateand replacement with the MACRA may have an impact on our business. The Affordable Care Act, passed in 2010, contained various provisions which haveimpacted us and our clients, and any replacement or adjustment of that law may change requirements related to our products or how our clients use them, aswell as reimbursement available to our clients. The QPP, which implements the MACRA, is oriented around the collection and analysis of qualitymeasurement data from our clients and expansion of programs such as ACOs. These may have a positive impact by requiring the expanded use of EHRs andanalytics tools to participate in certain federal programs, for example, while others, such as those mandating reductions in reimbursement for certain types ofproviders, may have a negative impact by reducing the resources available to purchase our products. Increases in fraud and abuse enforcement and penaltiesmay also adversely affect participants in the healthcare sector, including us.Increased government involvement in healthcare could materially and adversely impact our business.United States healthcare system reform at both the federal and state level could increase government involvement in healthcare, reconfigurereimbursement rates and otherwise change the business environment of our clients and the other entities with which we have a business relationship. Wecannot predict whether or when future healthcare reform initiatives at the federal or state level or other initiatives affecting our business will be proposed,enacted or implemented or what impact those initiatives may have on our business, financial condition or operating results. Our clients and the other entitieswith which we have a business relationship could react to these initiatives and the uncertainty surrounding these proposals by curtailing or deferringinvestments, including those for our products and services.The government had signaled, under the previous presidential Administration, increased enforcement activity targeting healthcare fraud and abuse,which could adversely impact our business, either directly or indirectly. This decision could be reversed by the current Administration, but is likely to remainin effect. To the extent that our clients, most of whom are providers, may be affected by this increased enforcement environment, our business couldcorrespondingly be affected. Additionally, government regulation could alter the clinical workflow of physicians, hospitals and other healthcare participants,thereby limiting the utility of our products and services to existing and potential clients and curtailing broad acceptance of our products and services. Furtherexamples of government involvement could include requiring the standardization of technology relating to EHRs, providing clients with incentives to adoptEHR solutions or developing a low-cost government-sponsored EHR solution. Additionally, certain safe harbors to the federal anti-kickback statute andcorresponding exceptions to the federal Ethics in Patient Referrals Act, known as the Stark Law, may continue to alter the competitive landscape. These safeharbors and exceptions are intended to accelerate the adoption of electronic prescription systems and EHR systems, and therefore provide new and attractiveopportunities for us to work with hospitals and other donors who wish to provide our solutions to physicians. At the same time, such safe harbors andexceptions may result in increased competition from providers of acute EHR solutions, whose hospital clients may seek to donate their existing acute EHRsolutions to physicians for use in ambulatory settings.If the healthcare information technology market fails to continue to develop as quickly as expected, our business, financial condition and operatingresults could be materially and adversely affected.The electronic healthcare information market is rapidly evolving. A number of market entrants have introduced or developed products and servicesthat are competitive with one or more components of the solutions we offer. We expect that additional companies will continue to enter this market,especially in response to recent legislative actions. In new and rapidly evolving industries, there is significant uncertainty and risk as to the demand for, andmarket acceptance of, recently introduced products and services. Because the markets for our products and services are new and evolving, we are not able topredict the size and growth rate of the markets with any certainty. If markets fail to develop, develop more slowly than expected or become saturated withcompetitors, our business, financial condition and operating results could be materially and adversely impacted. 18 We may not see the benefits of government programs initiated to accelerate the adoption and utilization of healthcare IT.While government programs have been initiated to improve the efficiency and quality of the healthcare sector, including expenditures to stimulatebusiness and accelerate the adoption and utilization of healthcare technology, we may not receive any more of those funds. For example, the passage ofHITECH authorized approximately $30 billion in expenditures, including discretionary funding, to further the adoption of EHRs. However, with most ofthose funds expended and taking into consideration the currently conservative fiscal environment within the United States Congress, there can be nocertainty that any additional planned financial incentives, if made, will be made in regard to our services, nor can there be any assurance that HITECH and/orthe MACRA will not be repealed or amended in a manner that would be unfavorable to our business. We also cannot predict the speed at which physicianswill adopt EHR systems in response to such government incentives, whether physicians will select our products and services, or whether physicians willimplement an EHR system at all, whether in response to government funding or at all. If the expected outcomes with respect to government programs do notmaterialize, or if physicians do not respond to such programs as expected, then this could materially and adversely impact our revenue growth, financialcondition and operating results.Changes in interoperability and other regulatory standards applicable to our software could require us to incur substantial additional developmentcosts.Our clients and the industry leaders enacting regulatory requirements are concerned with, and often require, that our software solutions beinteroperable with other third-party health IT suppliers. Market forces or governmental authorities have created and could continue to create softwareinteroperability standards that could apply to our solutions, and if our applicable products or services are not consistent with those standards, we could beforced to incur substantial additional development costs. We will likely incur increased development costs in delivering solutions to upgrade our softwareand healthcare devices to be in compliance with these varying and evolving standards, and delays may result in connection therewith. If our applicableproducts or services are not consistent with these evolving standards, our market position and sales could be adversely affected and we may have to investsignificantly in changes to our software solutions, which could materially and adversely impact our financial condition and operating results.Risks Related to Our CompanyThe realignment of our sales, services and support organizations could adversely affect client relationships and affect our future growth.We periodically make adjustments to our sales, services and support organizations in response to market opportunities, management changes, productintroductions, and other internal and external considerations. These changes could result in a temporary lack of focus and reduced productivity. In addition,these adjustments could result in our clients experiencing a change in our employees with whom they interact. Any of these changes could adversely impactindividual client relationships, client retention, and sales of products and services to existing clients. It is also possible that these changes could adverselyaffect our ability to sell our products and services to new clients. Any such events could materially and adversely impact our business, financial conditionand operating results.Our clients may not accept our products and services or may delay decisions whether to purchase our products and services.Our business model depends on our ability to sell our products and services. Acceptance of our products and services may require our clients to adoptdifferent behavior patterns and new methods of conducting business and exchanging information. We cannot provide assurance that our clients will integrateour products and services into their workflow or that participants in the healthcare market will accept our products and services as a replacement fortraditional methods of conducting healthcare transactions. Achieving market acceptance for our products and services will require substantial sales andmarketing efforts and the expenditure of significant financial and other resources to create awareness and demand by participants in the healthcare industry. Ifwe fail to achieve broad acceptance of our products and services by physicians, hospitals and other healthcare industry participants, or if we fail to positionour services as a preferred method for information management and healthcare delivery, our business, financial condition and operating results could bematerially and adversely impacted.It is difficult to predict the sales cycle and implementation schedule for our products and services.The duration of the sales cycle and implementation schedule for our products and services depends on a number of factors, including the nature andsize of the potential client and the extent of the commitment being made by the potential client, all of which may be difficult to predict. Our sales andmarketing efforts with respect to hospitals and large health organizations generally involve a lengthy sales cycle due to these organizations’ complexdecision-making processes. Additionally, in light of increased government involvement in healthcare and related changes in the operating environment forhealthcare organizations, our current and potential clients may react by reducing or deferring investments, including their purchases of our solutions orservices. If clients take longer 19 than we expect to decide whether to purchase our solutions, our selling expenses could increase and our revenues could decrease, which could materially andadversely impact our business, financial condition and operating results. If clients take longer than we expect to implement our solutions, our recognition ofrelated revenue would be delayed, which could also materially and adversely impact our business, financial condition and operating results.The implementation of large and complex contracts requires us to devote a sufficient amount of personnel, systems, equipment, technology and otherresources as are necessary to ensure a timely and successful implementation. In addition, due to the amount of resources dedicated to implement large andcomplex contracts, our ability to successfully bid for and implement other new customer contracts may be adversely affected. If we fail to implement largeand complex contracts successfully and in a timely manner, or if as a result of resource constraints, we fail to properly implement other new customercontracts, we may face significant challenges that will adversely affect our business, financial condition and operating results.Our future success depends upon our ability to grow, and if we are unable to manage our growth effectively, we may incur unexpected expenses and beunable to meet our clients’ requirements.We will need to expand our operations if we successfully achieve market acceptance for our products and services. We cannot be certain that oursystems, procedures, controls and existing space will be adequate to support expansion of our operations. Our future operating results will depend on theability of our officers and employees to manage changing business conditions and to effectively maintain and improve our technical, administrative,financial control and reporting systems. We may not be able to expand and upgrade our systems and infrastructure to accommodate these increases.Difficulties in managing any future growth, including as a result of integrating any prior or future acquisition with our existing businesses, could cause us toincur unexpected expenses, render us unable to meet our clients’ requirements, and consequently could materially and adversely impact our business,financial condition and operating results.We are working to expand our operations in markets outside of the United States. There can be no assurance that these efforts will be successful. Wehave limited experience in marketing, selling, implementing and supporting our products and services abroad. Expansion of our global sales and operationsmay require us to divert the efforts of our technical and management personnel and could result in significant expense to us, which could materially andadversely impact our operating results.We may be unable to successfully introduce new products or services or fail to keep pace with advances in technology.The successful implementation of our business model depends on our ability to adapt to evolving technologies and increasingly aggressive industrystandards and introduce new products and services accordingly. We cannot provide assurance that we will be able to introduce new products on schedule, orat all, or that such products will achieve market acceptance. Moreover, competitors may develop competitive products that could adversely affect ouroperating results. Any failure by us to introduce planned products or other new products or to introduce these products on schedule could have an adverseeffect on our revenue growth and operating results.If we cannot adapt to changing technologies, our products and services may become obsolete, and our business could suffer. Because the markets inwhich we operate are characterized by rapid technological change, we may be unable to anticipate changes in our current and potential clients’ or users’requirements that could make our existing technology obsolete. Our success will depend, in part, on our ability to continue to enhance our existing productsand services, develop new technology that addresses the increasingly sophisticated and varied needs of our prospective clients and users, license leadingtechnologies, and respond to technological advances and emerging industry standards and practices, all on a timely and cost-effective basis. Thedevelopment of our proprietary technology entails significant technical and business risks. We may not be successful in using new technologies effectivelyor adapting our proprietary technology to evolving client or user requirements or emerging industry standards. Any of the foregoing could materially andadversely impact our business, financial condition and operating results.Our business depends in part on our ability to establish and maintain additional strategic relationships.To be successful, we must continue to maintain our existing strategic relationships and establish additional strategic relationships with leaders in anumber of the markets in which we operate. This is critical to our success because we believe that these relationships contribute towards our ability to: •extend the reach of our products and services to a larger number of physicians and hospitals and to other participants in the healthcare industry; •develop and deploy new products and services; •further enhance our brand; and •generate additional revenue and cash flows. 20 Entering into strategic relationships is complicated because strategic partners may decide to compete with us in some or all of the markets in which weoperate. In addition, we may not be able to maintain or establish relationships with key participants in the healthcare industry if we conduct business withtheir competitors.We depend, in part, on our strategic partners’ ability to generate increased acceptance and use of our products and services. If we lose any of thesestrategic relationships or fail to establish additional relationships, or if our strategic relationships fail to benefit us as expected, this could materially andadversely impact our business, financial condition and operating results.We have acquired and expect to acquire new companies, investments or technologies, which are subject to significant risks.We have recently made investments in, or acquisitions of, businesses, joint ventures, new services and technologies, and other intellectual propertyrights, including our recently announced acquisition of Practice Fusion, Inc., the Netsmart Transaction and our acquisition of the EIS Business and providerand patient engagement solutions business of NantHealth. We expect that we will continue to make such investments and acquisitions in the future.Our investments and acquisitions involve numerous risks, including: •the potential failure to achieve the expected benefits of the investment or acquisition, including the inability to generate sufficient revenue tooffset acquisition or investment costs, or the inability to achieve expected synergies or cost savings; •unanticipated expenses related to acquired businesses or technologies; •the diversion of financial, managerial and other resources from existing operations; •the risks of entering into new markets in which we have little or no experience or where competitors may have stronger positions; •unanticipated regulatory and other compliance risks related to acquired companies or technologies; •potential write-offs or amortization of acquired assets or investments; •the potential loss of key employees, clients or partners of an acquired business; •delays in client purchases due to uncertainty related to any acquisition; •potential unknown liabilities associated with an investment or acquisition; and •the tax effects of any such acquisitions.In addition, prior to their acquisition by us, the EIS Business received requests for documents and information from the U.S. Attorney’s Office pursuantto separate civil investigative demands (each, a “CID”). The CIDs relate to the certification of the respective business’s software under the U.S. Office of theNational Coordinator for Health Information Technology’s electronic health record certification program and related business practices. If either CID leads toa claim or legal proceeding against us or our businesses that results in the imposition of damages, non-monetary relief, significant compliance, litigation orsettlement costs, or any other losses, in each case for which we are not indemnified by the seller of the acquired business, or are otherwise unable to recoveragainst the seller, such damages, relief, costs or losses could materially and adversely impact our business, financial condition and operating results.Additionally, prior to their acquisition by us, Practice Fusion received a request for documents and information from the U.S. Attorney’s Office for theDistrict of Vermont pursuant to a civil investigative demand (CID). The CID relates to the certification of Practice Fusion’s software under the U.S. Office ofthe National Coordinator for Health Information Technology’s electronic health record certification program, and related business practices We understandthat it is Practice Fusion’s practice to respond to such matters in a cooperative, thorough and timely manner. If we complete our pending acquisition ofPractice Fusion and the CID leads to a claim or legal proceeding against Practice Fusion that results in the imposition of damages, non-monetary relief,significant compliance, litigation or settlement costs, or any other losses, such damages, relief, costs or losses could materially and adversely impact ourbusiness, financial condition and operating results.Furthermore, the success of our acquisitions will depend, in part, on our ability to integrate our existing businesses with those of the acquiredbusinesses, including the integration of employees, products and technologies. These integrations are inherently complex, costly and time-consumingprocesses and involve numerous risks, including, but not limited to, unanticipated expenses and the diversion of financial, managerial, and other resourcesfrom both our existing operations and those of the acquired businesses. The integration of foreign acquisitions presents additional challenges associated withintegrating operations across different cultures and languages, as well as currency and regulatory risks associated with specific countries. 21 If we fail to properly evaluate and execute acquisitions or investments, or if we fail to successfully integrate acquired businesses, we may not be ableto achieve projected results or support the amount of consideration paid for such acquired businesses or investments, which could materially and adverselyimpact our business, financial condition and operating results.Finally, if we finance acquisitions or investments by issuing equity or convertible or other debt securities or loans, our existing stockholders may bediluted, or we could face constraints related to the terms of and repayment obligations related to the incurrence of indebtedness. This could materially andadversely impact our stock price.Our products or services could fail to perform properly due to errors or similar problems.Complex technology, such as ours, often contains defects or errors, some of which may remain undetected for a period of time. It is possible that sucherrors may be found after the introduction of new products or services or enhancements to existing products or services. We continually introduce newsolutions and enhancements to our solutions and, despite testing by us, it is possible that errors may occur in our software or offerings. If we detect any errorsbefore we introduce a solution, we may have to delay deployment for an extended period of time while we address the problem. If we do not discover errorsthat affect our new or current solutions or enhancements until after they are deployed, we would need to provide enhancements to correct such errors. Errorsin our products or services could result in: •product-related liabilities, fraud and abuse or patient safety issues; •unexpected expenses and liability and diversion of resources to remedy errors; •harm to our reputation; •lost sales; •delays in commercial releases; •delays in or loss of market acceptance of our solutions; •license termination or renegotiations; and •privacy and/or security vulnerabilities.Furthermore, our clients may use our products or services together with products or services from other companies or those that they have developedinternally. As a result, when problems occur, it may be difficult to identify the source of the problem. Even when our products or services do not cause theseproblems, the existence of these errors may cause us to incur significant costs, divert the attention of our technical personnel from our other solutiondevelopment efforts, impact our reputation and cause significant issues with our client relationships.We may be unable to protect, and we may incur significant costs in enforcing, our intellectual property rights.Our patents, trademarks, trade secrets, copyrights, and other intellectual property rights are important assets to us. Various events outside of our controlpose a threat to our intellectual property rights, as well as to our products, services, and technologies. For instance, any of our current or future intellectualproperty rights may be challenged by others or invalidated through administrative process or litigation. Any of our pending or future patent applications,whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all.We have taken efforts to protect our proprietary rights, including a combination of license agreements, confidentiality policies and procedures,confidentiality provisions in employment agreements, confidentiality agreements with third parties, and technical security measures, as well as our relianceon copyright, patent, trademark, trade secret and unfair competition laws. These efforts may not be sufficient or effective. For example, the secrecy of ourtrade secrets or other confidential information could be compromised by our employees or by third parties, which could cause us to lose the competitiveadvantage resulting from those trade secrets or confidential information. Unauthorized third parties may try to copy or reverse engineer portions of ourproducts or otherwise infringe upon, misappropriate or use our intellectual property. We may not be able to discover or determine the extent of anyunauthorized use of our proprietary rights. We may also conclude that, in some instances, the benefits of protecting our intellectual property rights may beoutweighed by the expense. 22 In addition, our platforms incorporate “open source” software components that are licensed to us under various public domain licenses. Open sourcelicense terms are often ambiguous, and there is little or no legal precedent governing the interpretation of many of the terms of certain of theselicenses. Therefore, the potential impact of such terms on our business is somewhat unknown. Further, some enterprises may be reluctant or unwilling to usecloud-based services, because they have concerns regarding the risks associated with the security and reliability, among other things, of the technologydelivery model associated with these services. If enterprises do not perceive the benefits of our services, then the market for these services may not expand asmuch or develop as quickly as we expect, either of which would adversely affect our business, financial condition, or operating results.Legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving. The lawsof some foreign countries may not be as protective of intellectual property rights as those in the United States, and effective intellectual property protectionmay not be available in every country in which our products and services are distributed.Any impairment of our intellectual property rights, or our failure to protect our intellectual property rights adequately, could give our competitors’access to our technology and could materially and adversely impact our business and operating results. Any increase in the unauthorized use of ourintellectual property could also divert the efforts of our technical and management personnel and result in significant additional expense to us, which couldmaterially and adversely impact our operating results. Finally, we may be required to spend significant resources to monitor and protect our intellectualproperty rights, including with respect to legal proceedings, which could result in substantial costs and diversion of resources and could materially andadversely impact our business, financial condition and operating results.We could be impacted by unfavorable results of legal proceedings and claims, such as being found to have infringed on a third party’s intellectualproperty rights.We are subject to various legal proceedings and claims that have not yet been fully resolved, including the CIDs related to Practice Fusion and the EISBusiness and those discussed under Note 17, “Contingencies,” to our consolidated financial statements included in Part II, Item 8, “Financial Statements andSupplementary Data” of this Form 10-K, and additional claims may arise in the future. For example, companies in our industry, including many of ourcompetitors, have been subject to litigation based on allegations of patent infringement or other violations of intellectual property rights. In particular, patentholding companies often engage in litigation seeking to monetize patents that they have purchased or otherwise obtained. As the number of competitors,patents and patent holding companies in our industry increases, the functionality of our products and services expands, and we enter into new geographiesand markets, the number of intellectual property rights-related actions against us has increased and is likely to continue to increase. We are vigorouslydefending against these actions in a number of jurisdictions.If we are found to infringe one or more patents or other intellectual property rights, regardless of whether we can develop non-infringing technology,we may be required to pay substantial damages or royalties to a third party, and we may be subject to a temporary or permanent injunction prohibiting usfrom marketing or selling certain products or services. Furthermore, certain of our agreements require us to indemnify our clients and third-party serviceproviders for third party intellectual property infringement claims, which would increase the costs to us of an adverse ruling on such claims, and couldadversely impact our relationships with our clients and third party service providers. In certain cases, we may consider the desirability of entering intolicensing agreements, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. Theselicense agreements may also significantly increase our operating expenses.Regardless of the merit of particular claims, legal proceedings may be expensive, time-consuming, disruptive to our operations and distracting to ourmanagement. If one or more legal matters were resolved against us in a reporting period for amounts in excess of management’s expectations, ourconsolidated financial statements for that reporting period could be materially and adversely impacted. Such an outcome could result in significantcompensatory, punitive or other monetary damages; disgorgement of revenue or profits; remedial corporate measures; or other injunctive or equitable reliefagainst us, any of which could materially and adversely impact our business, financial condition and operating results.We maintain insurance coverage that may apply in the event we are involved in a legal proceeding or claim. This coverage may not continue to beavailable on acceptable terms, may not be available in sufficient amounts to cover one or more claims against us, and may include larger self-insuredretentions or exclusions for certain products or services. In addition, the insurer might disclaim coverage as to any future claim. This could increase themagnitude of the impact of one or more legal proceedings or claims being resolved against us. 23 Our exposure to risks associated with various claims, including the use of intellectual property, may be increased as a result of acquisitions of othercompanies. For example, we may have a lower level of visibility into the development process with respect to intellectual property, or the care taken tosafeguard against infringement risks, with respect to the acquired company or its technology. In addition, third parties may make infringement or relatedclaims after we have acquired companies that had not been asserted prior to the acquisition.Our success depends on the continued service and availability of key personnel.Much of our future performance depends on the continued availability and service of our key personnel, including our Chief Executive Officer andour President, the other members of our senior management team, and our other highly qualified personnel, as well as being able to hire additional highlyqualified personnel who have a deep understanding of our industry. Competition in our industry for such personnel, especially with respect to sales andtechnical personnel, is intense. We are required to expend significant resources on identifying, hiring, developing, motivating and retaining such personnelthroughout our organization. Many of the companies with whom we compete for such personnel have greater resources than us, and may be able to offer moreattractive terms of employment. Our investment in training and developing our employees makes them more attractive to our clients and competitors, whomay then seek to recruit them. Furthermore, our compensation arrangements, such as our equity award programs, may not always be successful in attractingnew employees and retaining and motivating our existing employees. Our failure to attract new highly qualified personnel, or our failure to retain andmotivate our existing key personnel, could materially and adversely impact our business, financial condition and operating results.Our independent content and service providers may fail to perform adequately or comply with laws, regulations or contractual covenants.We depend on independent content and service providers for communications and information services and for some of the benefits we providethrough our software applications and services, including the maintenance of managed care pharmacy guidelines, drug interaction reviews, the routing oftransaction data to third-party payers, and the hosting of our applications. Our ability to rely on these services could be impaired as a result of the failure ofsuch providers to comply with applicable laws, regulations and contractual covenants, or as a result of events affecting such providers, such as power loss,telecommunication failures, software or hardware errors, computer viruses and similar disruptive problems, fire, flood and natural disasters. Any such failureor event could adversely affect our relationships with our clients and damage our reputation. This could materially and adversely impact our business,financial condition and operating results.We may have no means of replacing content or services on a timely basis or at all if they are inadequate or in the event of a service interruption orfailure. We also rely on independent content providers for the majority of the clinical, educational and other healthcare information that we provide. Inaddition, we depend on our content providers to deliver high quality content from reliable sources and to continually upgrade their content in response todemand and evolving healthcare industry trends. If these parties fail to develop and maintain high quality, attractive content, the value of our brand and ourbusiness, financial condition and operating results could be materially and adversely impacted.We may be liable for use of content we provide.We provide content for use by healthcare providers in treating patients. Third-party content suppliers provide certain of this content. If this content isincorrect or incomplete, adverse consequences, including death, may occur and give rise to product liability and other claims against us. In addition, certainof our solutions provide applications that relate to patient clinical information, and a court or government agency may take the position that our delivery ofhealth information directly, including through licensed practitioners, or delivery of information by a third party site that a consumer accesses through ourwebsites, exposes us to personal injury liability, or other liability for wrongful delivery or handling of healthcare services or erroneous health information.While we maintain insurance coverage in an amount that we believe is sufficient for our business, we cannot provide assurance that this coverage will proveto be adequate or will continue to be available on acceptable terms, if at all. A claim that is brought against us that is uninsured or under-insured couldmaterially and adversely impact our business, financial condition and operating results. Even unsuccessful claims could result in substantial costs anddiversion of management and other resources. 24 If our security is breached, we could be subject to liability, and clients could be deterred from using our products and services.Our business relies on the secure electronic transmission, storage and hosting of sensitive information, including PHI, financial information and othersensitive information relating to our clients, company and workforce. As a result, we face risk of a deliberate or unintentional incident involvingunauthorized access to our computer systems or data that could result in the misappropriation or loss of assets or the disclosure of sensitive information, thecorruption of data, or other disruption of our business operations. Recently, we were subject to a ransomware attack that impacted two of our data centers,resulting in outages that left certain of our solutions offline for our clients. Any future denial-of-service, ransomware or other Internet-based attacks mayrange from mere vandalism of our electronic systems to systematic theft of sensitive information and intellectual property. We believe that companies in ourindustry may continue to be targeted by such events with increasing frequency due to the increasing value of healthcare-related data.We have devoted and continue to devote significant resources to protecting and maintaining the confidentiality of this information, includingdesigning and implementing security and privacy programs and controls, training our workforce and implementing new technology. We have no guaranteethat these programs and controls will be adequate to prevent all possible security threats. Any compromise of our electronic systems, including theunauthorized access, use or disclosure of sensitive information or a significant disruption of our computing assets and networks, could adversely affect ourreputation or our ability to fulfill contractual obligations, could require us to devote significant financial and other resources to mitigate such problems, andcould increase our future cyber security costs, including through organizational changes, deploying additional personnel and protection technologies,further training of employees, and engaging third party experts and consultants. Moreover, unauthorized access, use or disclosure of such sensitiveinformation could result in civil or criminal liability or regulatory action, including potential fines and penalties. In addition, any real or perceivedcompromise of our security or disclosure of sensitive information may deter clients from using or purchasing our products and services in the future, whichcould materially and adversely impact our financial condition and operating results.We use third-party contractors to store, transmit or host sensitive information for our clients. While we have contractual or other mechanism in placewith these third-party contractors that require them to have appropriate security programs and controls in place and, frequently, to indemnify us for security-related breaches, any compromise or failure of these contractors’ privacy and security practices could adversely affect our reputation, require us to devotefinancial and other resources to mitigate these breaches, or subject us to litigation from our clients.Companies, including Allscripts, and governmental agencies have experienced high profile incidents involving data security breaches by entities thattransmit and store sensitive information. We are subject to a class action lawsuit related to our recent ransomware attack, and lawsuits resulting from these andother similar security breaches have sought very significant monetary damages. While we maintain insurance coverage that, subject to policy terms andconditions and subject to a significant self-insured retention, is designed to address certain aspects of security-related risks, such insurance coverage may beinsufficient to cover all losses or all types of claims that may arise in our business, and we cannot provide assurance that this coverage will prove to beadequate or will continue to be available on acceptable terms.We may be forced to reduce our prices.We may be subject to pricing pressures with respect to our future sales arising from various sources, including practices of managed care organizations,group purchasing arrangements made through government programs such as the Regional Extension Centers, and government action affectingreimbursement levels related to physicians, hospitals, home health professionals or any combination thereof under Medicare, Medicaid and other governmenthealth programs. Our clients and the other entities with which we have a business relationship are affected by changes in statutes, regulations and limitationsin governmental spending for Medicare, Medicaid and other programs. Recent government actions and future legislative and administrative changes couldlimit government spending for the Medicare and Medicaid programs, limit payments to hospitals and other providers, increase emphasis on competition,impose price controls, initiate new and expanded value-based reimbursement programs and create other programs that potentially could have an adverseeffect on our clients and the other entities with which we have a business relationship. If our pricing experiences significant downward pressure, our businesswill be less profitable and our financial condition and operating results could be materially and adversely affected.Our failure to license and integrate third-party technologies could harm our business.We depend upon licenses for some of the technology used in our solutions from third-party vendors, and intend to continue licensing technologiesfrom third parties. These technologies may not continue to be available to us on commercially reasonable terms or at all. Most of these licenses can berenewed only by mutual consent and may be terminated if we breach the terms of the license and fail to cure the breach within a specified period of time. Ourinability to obtain, maintain or comply with any of these licenses could delay development until equivalent technology can be identified, licensed andintegrated, which would harm our business, financial condition and operating results. 25 Most of our third-party licenses are non-exclusive and our competitors may obtain the right to use any of the technology covered by these licensesand use the technology to compete directly with us. Our use of third-party technologies exposes us to increased risks, including, but not limited to, risksassociated with the integration of new technology into our solutions, the diversion of our resources from development of our own proprietary technology andour inability to generate revenue from licensed technology sufficient to offset associated acquisition and maintenance costs. In addition, if our vendorschoose to discontinue support of the licensed technology in the future or are unsuccessful in their continued research and development efforts, we may not beable to modify or adapt our own solutions.We could fail to maintain and expand our business with our existing clients or effectively transition our clients to newer products.Our business model depends on our success with maintaining our existing clients and selling new and incremental products and services to ourexisting clients. In addition, our success with certain clients requires our achieving interoperability between our new products and our legacy products toprovide a single solution that connects healthcare providers across care settings. Certain of our clinical solutions clients initially purchase one or a limitednumber of our products and services. These clients may choose not to expand their use of, or purchase, additional modules. Also, as we deploy newapplications and features for our existing solutions or introduce new solutions and services, our current clients could choose not to purchase these newofferings. If we fail to generate additional business from our current clients, our revenue could grow at a slower rate or even decrease.In addition, the transition of our existing clients to current versions of our products presents certain risks, including the risk of data loss or corruptionor delays in completion. If such events occur, our client relationships and reputation could be damaged. Any of the foregoing could materially and adverselyimpact our business, financial condition and operating results.Our business is subject to the risks of global operations.We operate in several countries outside of the United States, including significant operations in Canada, India, Israel, the UK and Australia, and we arefurther expanding our global sales efforts. This subjects our business to risks and challenges associated with operating globally, which include: •changes in local political, economic, social and labor conditions; •natural disasters, acts of war, terrorism, pandemics or security breaches; •different employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, languageand cultural differences; •restrictions on foreign ownership and investments, and stringent foreign exchange controls that may prevent us from repatriating, or make itcost-prohibitive for us to repatriate, cash earned in countries outside of the United States; •import and export requirements, tariffs, trade disputes and barriers; •longer payment cycles in some countries, increased credit risk and higher levels of payment fraud; •uncertainty regarding liability for our products and services, including uncertainty as a result of local laws and lack of legal precedent; •different or lesser protection of our intellectual property; •different legal and regulatory requirements that may apply to our products and/or how we operate; and •localization of our products and services, including translation into foreign languages and associated expenses.All of the foregoing risks could prevent or restrict us from offering products or services to a particular market, could increase our operating costs, andcould otherwise materially and adversely impact our business, financial condition and operating results. 26 In addition, our compliance with complex foreign and United States laws and regulations that apply to our global operations increases our cost ofdoing business. These numerous and sometimes conflicting laws and regulations include, but are not limited to, internal control and disclosure rules, dataprivacy requirements, anti-corruption laws (such as the United States Foreign Corrupt Practices Act) and other local laws prohibiting corrupt payments togovernment officials, and antitrust and competition regulations. Violations of these laws and regulations could result in, among other things, fines andpenalties, criminal sanctions, prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries, andcould also affect our global expansion efforts, our business and our operating results. Although we have implemented policies and procedures designed toensure compliance with these laws and regulations, there can be no assurance that our employees, contractors, agents or distributors, or third parties withwhom we do business, will not violate our policies. Furthermore, potential changes in data privacy and protection requirements may increase our future legaland regulatory compliance burden.Finally, since we conduct business in currencies other than the United States dollar, but report our financial results in United States dollars, we faceexposure to fluctuations in currency exchange rates. Significant fluctuations in exchange rates between the United States dollar and foreign currencies maymake our products and services more expensive for our global clients, or otherwise materially and adversely impact our operating results. We mayoccasionally hedge our global currency exposure; however, hedging programs are inherently risky and could expose us to additional risks.We could be subject to changes in our tax rates, the adoption of new United States or international tax legislation or exposure to additional taxliabilities.We are subject to taxation in the United States and numerous foreign jurisdictions. Current economic and political conditions make tax rates in anyjurisdiction, including those in the United States, subject to significant change. Recently in the United States, tax reform has passed; the level of difficultywith interpretation could be an additional risk in the foreseeable future, particularly with the new highly technical international provisions. Our futureeffective tax rates could also be affected by changes in the mix of our earnings in countries with differing statutory tax rates, changes in the valuation of ourdeferred tax assets and liabilities, or changes in tax laws or their interpretation, including changes in tax laws affecting our products and services and thehealthcare industry more generally. We are also subject to the examination of our tax returns and other documentation by the Internal Revenue Service andother tax authorities. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provisionfor taxes. There can be no assurance as to the outcome of these examinations or that our assessments of the likelihood of an adverse outcome will be correct. Ifour effective tax rates were to increase, particularly in the United States, or if the ultimate determination of our taxes owed is for an amount in excess ofamounts previously accrued, then this could materially and adversely impact our financial condition and operating results.Our business and reputation may be impacted by IT system failures or other disruptions.We may be subject to IT systems failures and network disruptions. These may be caused by natural disasters, accidents, power disruptions,telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions. System redundancymay be ineffective or inadequate, and our disaster recovery planning may not be sufficient for all eventualities. Such failures or disruptions could preventaccess to or the delivery of certain of our products or services, compromise our data or our clients’ data or result in delayed or cancelled orders, as well aspotentially expose us to third party claims. System failures and disruptions could also impede our transactions processing services and financial reporting.War, terrorism, geopolitical uncertainties, public health issues and other business disruptions have caused and could cause damage to the globaleconomy, and thus have a material and adverse impact on our business, financial condition and operating results. Our business operations are subject tointerruption by natural disasters, fire, power shortages, terrorist attacks and other hostile acts, labor disputes, public health issues and other issues beyond ourcontrol. Such events could decrease our demand for our products or services or make it difficult or impossible for us to develop and deliver our products orservices to our clients. A significant portion of our research and development activities, our corporate headquarters, our IT systems and certain of our othercritical business operations are concentrated in a few geographic areas. In the event of a business disruption in one or more of those areas, we could incursignificant losses, require substantial recovery time and experience significant expenditures in order to resume operations, which could materially andadversely impact our business, financial condition and operating results. 27 Our failure to maintain proper and effective internal controls over financial reporting could impair our ability to produce accurate and timelyfinancial statements.We maintain internal financial and accounting controls and procedures that are designed to provide reasonable assurance regarding the reliability ofour financial reporting and the preparation of our financial statements in accordance with accounting principles generally accepted in the United States(“GAAP”). Ensuring that we have adequate internal financial and accounting controls and procedures in place, such that we can provide accurate financialstatements on a timely basis, is a costly and time-consuming process that requires significant management attention. Additionally, if our independentregistered public accounting firm, which is subject to oversight by the Public Company Accounting Oversight Board, is not satisfied with our internalcontrols over financial reporting, or if the firm interprets the relevant rules, regulations or requirements related to the maintenance of internal controls overfinancial reporting differently than we do, then it may issue an adverse opinion.As we continue to expand our business, the challenges involved in implementing adequate internal controls over financial reporting will increase.Any failure to maintain adequate controls, any inability to produce accurate financial statements on a timely basis, or any adverse opinion issued byour independent registered public accounting firm related to our internal controls over financial reporting, could increase our operating costs and materiallyand adversely impact our operating results. In addition, investors’ perceptions that our internal controls over financial reporting are inadequate, or that we areunable to produce accurate financial statements on a timely basis, may harm our stock price and make it more difficult for us to effectively market and sell ourservices to clients, which could materially and adversely impact our business, financial condition, and operating results. This could also subject us tosanctions or investigations by Nasdaq, the SEC or other applicable regulatory authorities, which could require the commitment of additional financial andmanagement resources.We could suffer losses due to asset impairment charges.We are required under GAAP to test our goodwill and indefinite-lived intangible assets for impairment on an annual basis, as well as on an interimbasis if indicators for potential impairment, such as a decline in our stock price, exist. Indicators that are considered include, but are not limited to, significantchanges in performance relative to expected operating results, negative economic trends, or a significant decline in our stock price. In addition, weperiodically review our finite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying value may not berecoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverableinclude slower growth rates or the divestiture of a business or asset below its carrying value. We may be required to record a charge to earnings in ourconsolidated financial statements during the period in which any impairment of our goodwill or intangible assets is determined. This could materially andadversely impact on our operating results.There are inherent uncertainties in management’s estimates, judgments and assumptions used in assessing recoverability of goodwill and intangibleassets. Any changes in key assumptions, including failure to meet business plans, a further deterioration in the market or other unanticipated events andcircumstances, may affect the accuracy or validity of such estimates and could potentially result in an impairment charge.We are consolidating the financial results of Netsmart in our consolidated financial statements based on certain factors that require consolidationaccounting treatment. If those factors change in the future, it may require us to account for Netsmart differently.Our financial statements are prepared on the basis that Netsmart meets the requirements for consolidation accounting treatment. As a result, we havereflected 100% of the financial results of Netsmart in our consolidated financial statements following the consummation of the transaction.Future changes in the capital or voting structure of Netsmart or our contractual arrangements with Netsmart could change our conclusions regardingwhether Netsmart meets the requirements for consolidation accounting treatment. If this is the case, the presentation of the information in our financialstatements would change, which could be perceived negatively by investors, and could have an adverse effect on the market price of our common stock.We rely on Netsmart to timely deliver important financial information to us. In the event that the financial information is inaccurate, incomplete, or nottimely, we would not be able to meet our financial reporting obligations as required by the SEC. 28 We require Netsmart to provide financial information in order to prepare our consolidated financial statements. In the event that the financialinformation is inaccurate, incomplete, or not timely, we would not be able to meet our financial reporting obligations as required by the SEC.Netsmart is highly leveraged and we have entered into contractual arrangements with Netsmart that subject us to certain legal and financial terms thatcould adversely affect us.In connection with the formation of Netsmart, Netsmart incurred $562 million of indebtedness. While Netsmart’s debt is non-recourse to us and ourwholly-owned subsidiaries, Netsmart’s level of indebtedness could have important consequences to Netsmart’s business, including making it difficult forNetsmart to satisfy its obligations, increase its vulnerability to general adverse economic and industry conditions, require it to dedicate a substantial portionof its cash flow from operations to payments on its indebtedness, and otherwise place it at a competitive disadvantage compared to its competitors who haveless indebtedness, all of which could negatively affect our investment in Netsmart.Netsmart may also be able to incur substantial additional indebtedness in the future. If new indebtedness is added to its current indebtedness levels,the related risks that we face could intensify.Netsmart’s credit facility contain, and any future indebtedness would likely contain, a number of restrictive covenants that impose significantoperating and financial restrictions on it, including restrictions on its ability to take actions that may be in its, and our, best interests. Additionally,Netsmart’s credit facility requires it to satisfy and maintain specified financial ratios. Netsmart’s ability to meet those financial ratios can be affected byevents beyond its, and our, control, and Netsmart may not be able to continue to meet those ratios. A breach of any of these covenants could result in an eventof default under Netsmart’s credit facility, which could negatively affect our investment in Netsmart.Netsmart is governed by a Board of Managers (the “Netsmart Board”), of which members appointed by Allscripts hold three votes, members appointedby GI Netsmart Holdings LLC (“GI”) hold three votes and one member, who is the Chief Executive Officer of Netsmart, holds one vote. Any action to betaken by the Netsmart Board must be taken by members holding a majority of votes. The Netsmart Board manages the business and affairs of Netsmart,subject to the Allscripts members’ right to approve Netsmart’s annual operating budget, and provided that certain significant actions to be taken by Netsmartrequire the consent of both Allscripts and GI, so long as they each maintain a minimum threshold ownership in Netsmart. As a result, with respect to somematters we could be outvoted by the other members of the Netsmart Board. If the Netsmart Board or GI make decisions that affect Netsmart which we disagreewith and which we cannot block or override, the future success of Netsmart may be impaired and any amount that we have invested in it may be at risk.GI’s investment in Netsmart is in the form of Class A Preferred Units of Netsmart, which entitle GI, in certain liquidation events (including a sale ofNetsmart), to the greater of (i) an 11% preferred return (compounded annually) and (ii) the as-converted value of Class A Common Units of Netsmart. Ourinvestment in Netsmart is in the form of Class A Common Units of Netsmart. Additionally, GI has the right to cause Netsmart to redeem its equity upon theearlier of the fifth anniversary of the formation of Netsmart or a change in control of Allscripts.Our investment in Netsmart is also subject to certain restrictions on our ability to transfer our interests in Netsmart and, under certain circumstances, wemay be forced to sell our interests in Netsmart. During the first two years of Netsmart, neither we nor GI are permitted to transfer their equity to a third partywithout the other party’s consent. In order for a party to cause a sale of Netsmart (i.e., a party’s “drag-along right”) under Netsmart’s operating agreement,prior to the fifth anniversary of the formation of Netsmart, both Allscripts and GI must agree and act together and, after the fifth anniversary, only GI would beentitled to initiate the drag-along right. 29 Risks Related to Our Common StockOur Board of Directors is authorized to issue preferred stock, and our certificate of incorporation, bylaws and debt instruments contain anti-takeoverprovisions.Our Board of Directors (our “Board”) has the authority to issue up to 1,000,000 shares of preferred stock and to determine the preferences, rights andprivileges of those shares without any further vote or action by our stockholders. In the event that we issue shares of preferred stock in the future that haspreference over our common stock with respect to payment of dividends or upon our liquidation, dissolution or winding-up, or if we issue shares of preferredstock that is convertible into our common stock at greater than a one-to-one ratio, the voting and other rights of the holders of our common stock or our stockprice could be materially and adversely impacted. The ability of our Board to issue shares of preferred stock without any action on the part of ourstockholders could discourage, delay or prevent a change in control of our company or changes in our management that certain of our stockholders maydeem advantageous, which could lower our stock price.Our certificate of incorporation and bylaws also contain provisions that could discourage, delay, or prevent a change in control of our company orchanges in our management that certain of our stockholders may deem advantageous, which could lower our stock price. These provisions, among otherthings, prohibit our stockholders from acting by written consent or calling a special meeting of stockholders, and provide that our Board is expresslyauthorized to make, alter or repeal our bylaws. Additionally: •the indenture (the “Indenture”) governing our 1.25% Cash Convertible Senior Notes (the “1.25% Notes”) may prohibit us from engaging in achange of control of our company unless, among other things, the surviving entity assumes our obligations under the 1.25% Notes; •if a change of control of our company occurs, the Indenture may permit holders of the 1.25% Notes to require us to repurchase all or a portion ofthe 1.25% Notes, and may also require us to pay a cash make-whole premium by increasing the conversion rate for a note holder who elects toconvert; and •immediately prior to a change of control of our company, the 2015 Credit Agreement (as defined under Note 6, “Debt,” to our consolidatedfinancial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K) may require us to repay allindebtedness outstanding thereunder.These provisions in our certificate of incorporation, bylaws, and debt instruments could discourage, delay or prevent a change of control of ourcompany or changes in our management that certain of our stockholders may deem advantageous, and therefore could limit our stock price.Finally, our certificate of incorporation includes an election to be governed by Section 203 of the Delaware General Corporation Law, which prohibitsus from engaging in any business combination with an interested stockholder for a period of three years from the date the person became an interestedstockholder, unless certain conditions are met. This provision could discourage, delay or prevent a change of control of our company by making it moredifficult for stockholders or potential acquirers to effect such a change of control without negotiation, and may apply even if some of our stockholdersconsider the acquisition beneficial to them. This provision could also adversely affect our stock price.Our stock price is subject to volatility.The market for our common stock has experienced and may experience significant price and volume fluctuations in response to a number of factors,many of which are beyond our control. Additionally, the stock market in general, and the market prices for companies in our industry in particular, haveexperienced extreme volatility that has often been unrelated or disproportionate to the operating performance of those companies. These broad market andindustry fluctuations may materially and adversely impact our stock price, regardless of our actual operating performance. Furthermore, volatility in our stockprice could force us to increase our cash compensation to employees or grant larger stock awards than we have historically, which could materially andadversely impact our financial condition and operating results.Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we arethe subject of such litigation, it could result in substantial costs to us and divert our management’s attention and resources, which could materially andadversely impact our financial condition and operating results. 30 Our quarterly operating results may vary.Our quarterly operating results have varied in the past, and we expect that our quarterly operating results will continue to vary in future periodsdepending on a number of factors, some of which we have no control over, including clients’ budgetary constraints and internal acceptance procedures, thesales, service and implementation cycles for our software products, potential downturns in the healthcare market and in economic conditions generally, andother factors described in this “Risk Factors” section.We base our expense levels in part on our expectations concerning future revenue, and these expense levels are relatively fixed in the short-term. If wehave lower revenue than expected, we may not be able to reduce our spending in the short-term in response. Any shortfall in revenue could materially andadversely impact our operating results. In addition, our product sales cycle for larger sales is lengthy and unpredictable, making it difficult to estimate ourfuture bookings for any given period. If we do not achieve projected booking targets for a given period, securities analysts may change theirrecommendations on our stock price. For these and other reasons, we may not meet the earnings estimates of securities analysts or investors, and our stockprice could be materially and adversely impacted.Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations.Our level of indebtedness could have important consequences. For example, it could make it more difficult for us to satisfy our obligations, increaseour vulnerability to general adverse economic and industry conditions, require us to dedicate a substantial portion of our cash flow from operations topayments on our indebtedness, and otherwise place us at a competitive disadvantage compared to our competitors who have less indebtedness. We may alsobe able to incur substantial additional indebtedness in the future. If new indebtedness is added to our current indebtedness levels, the related risks that weface could intensify.The 2015 Credit Agreement and the Indenture each contain, and any future indebtedness would likely contain, a number of restrictive covenants thatimpose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our best interests.Additionally, the 2015 Credit Agreement requires us to satisfy and maintain specified financial ratios. Our ability to meet those financial ratios can beaffected by events beyond our control, and we may not be able to continue to meet those ratios. A breach of any of these covenants could result in an event ofdefault under the 2015 Credit Agreement or the Indenture.Upon the occurrence of an event of default, our lenders could terminate all commitments to extend further credit, and some or all of our outstandingindebtedness may become immediately due and payable. We may not have or be able to obtain sufficient funds to make these accelerated payments.Additionally, we have pledged substantially all of our tangible and intangible property as collateral under the 2015 Credit Agreement, and the lenders underthe 2015 Credit Agreement could proceed against such collateral if we were unable to timely repay these amounts.The accounting for the 1.25% Notes will result in our having to recognize interest expense significantly greater than the stated interest rate of the notesand may result in volatility to our Consolidated Statements of Operations.We are obligated to settle any conversions of the 1.25% Notes entirely in cash. In accordance with GAAP, the conversion option that is part of the1.25% Notes is accounted for as a derivative pursuant to accounting standards relating to derivative instruments and hedging activities. In general, thisresulted in an initial valuation of the conversion option separate from the debt component of the 1.25% Notes, resulting in an original issue discount. Theoriginal issue discount will be accreted to interest expense over the term of the 1.25% Notes, which will result in an effective interest rate reported in ourfinancial statements significantly in excess of the stated coupon rate of the 1.25% Notes. This accounting treatment will reduce our earnings and couldadversely affect the price at which our common stock trades.For each financial statement period after the issuance of the 1.25% Notes, a hedge gain (or loss) will be reported in our financial statements to theextent the valuation of the conversion option changes from the previous period. The 1.25% Call Option (as defined under Note 6, “Debt,” to our consolidatedfinancial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K) is also accounted for as a derivativeinstrument, substantially offsetting the gain (or loss) associated with changes to the valuation of the conversion option. This may result in increasedvolatility to our operating results. 31 The convertible note hedge and warrant transactions we entered into in connection with the issuance of our 1.25% Notes may not provide the benefitswe anticipate, and may have a dilutive effect on our common stock.Concurrently with the issuance of the 1.25% Notes, we entered into the 1.25% Call Option with, and issued the 1.25% Warrants (as defined under Note6, “Debt,” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K) to certain ofthe initial purchasers of the 1.25% Notes. We entered into the 1.25% Call Option transaction with the expectation that it would offset potential cashpayments in excess of the principal amount of the 1.25% Notes upon conversion of the 1.25% Notes. The hedge counterparties are financial institutions oraffiliates of financial institutions, and we are subject to the risk that these hedge counterparties may default under the 1.25% Call Option transactions. Ourexposure to the credit risk of the hedge counterparties is not secured by any collateral. If one or more of the hedge counterparties to the 1.25% Call Optiontransactions becomes subject to any insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposureat the time under those transactions. Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increasein our stock price and in the volatility of our stock price. In addition, upon a default by one of the hedge counterparties, we may suffer adverse taxconsequences and dilution with respect to our common stock. We can provide no assurances as to the financial stability or viability of any of the hedgecounterparties.Separately, we also issued the 1.25% Warrants to the hedge counterparties. The 1.25% Warrants could separately have a dilutive effect to the extentthat our stock price, as measured under the terms of the transaction, exceeds the strike price of the 1.25% Warrants.Item 1B. Unresolved Staff CommentsNone. Item 2. PropertiesOur corporate headquarters are located in Chicago, Illinois. As of December 31, 2017, we leased [1.3 million] square feet of building space worldwide.Our facilities are primarily located in the United States, although we also maintain facilities in Canada, India, Israel, Singapore and the United Kingdom. Ourfacilities house various sales, services, support, development, and data processing functions, as well as certain ancillary functions and other back-officefunctions related to our current operations. We believe that our existing facilities are adequate to meet our current business requirements. If we requireadditional space, we believe that we will be able to obtain such space on acceptable, commercially reasonable terms.Item 3. Legal ProceedingsWe hereby incorporate by reference Note 17, “Contingencies,” to our consolidated financial statements included in Part II, Item 8, “FinancialStatements and Supplementary Data” of this Form 10-K.Item 4. Mine Safety DisclosuresNot applicable. Item 4A. Executive OfficersThe following sets forth certain information regarding our executive officers as of February 21, 2018, based on information furnished by each of them: Name Age PositionPaul Black 59 Chief Executive OfficerBrian Farley 48 Executive Vice President, General Counsel and Chief Administrative OfficerLisa Khorey 51 Executive Vice President, Chief Client Delivery OfficerDennis Olis 55 Chief Financial OfficerRichard Poulton 52 President 32 Paul Black has served as our Chief Executive Officer since December 2012 and is also a member of our Board of Directors (our “Board”). Mr. Blackalso served as our President from December 2012 to September 2015. Prior to joining, Mr. Black served as Operating Executive of Genstar Capital, LLC, aprivate equity firm, and Senior Advisor at New Mountain Finance Corporation, an investment management company. From 1994 to 2007, Mr. Black servedin various executive positions (including Chief Operating Officer from 2005 to 2007) at Cerner Corporation, a healthcare IT company. Mr. Black has alsoserved as a director of Truman Medical Centers since 2001.Brian Farley has served as our Executive Vice President, General Counsel and Chief Administrative Officer since August 2017 and prior to thatserved as our Senior Vice President, General Counsel and Corporate Secretary since May 2013. From 2005 to 2013, Mr. Farley served in various positions atMotorola Mobility LLC, a provider of mobile communication devices and video and data delivery solutions. His most recent role at Motorola Mobility LLCwas Corporate Vice President and General Counsel of Motorola’s Home business.Lisa Khorey has served as our Executive Vice President, Chief Client Delivery Officer since November 2016. Prior to joining Allscripts, Ms. Khoreywas the executive director of Ernst & Young’s National Provider Practice, specializing in analytics. Previously, Ms. Khorey held a variety of technical andexecutive leadership roles at University of Pittsburgh Medical Center.Dennis Olis has served as our Chief Financial Officer since January 2018 and prior to that served as our interim Chief Financial Officer since May2017. From November 2016 to May 2017, Mr. Olis served as Senior Vice President, Strategic Initiatives and, from November 2012 to November 2016, Mr.Olis served as Senior Vice President, Operations. Prior to joining, Mr. Olis was employed by Motorola, Inc. and Motorola Mobility LLC, a provider of mobilecommunication devices and video and data delivery solutions, for over 28 years. His most recent role at Motorola was Corporate Vice President, MobileDevice Operations. From 2007 until 2009, he was Corporate Vice President of Finance, Research & Development, Portfolio Management, and Planning atMotorola.Richard Poulton has served as our President since October 2015. From October 2012 to March 2016, Mr. Poulton served as our Chief FinancialOfficer. From October 2012 to September 2015, Mr. Poulton also served as our Executive Vice President. From 2006 to 2012, Mr. Poulton served in variouspositions at AAR Corp., a provider of products and services to commercial aviation and the government and defense industries. His most recent role at AARCorp. was Chief Financial Officer and Treasurer. Mr. Poulton also spent more than ten years at UAL Corporation in a variety of financial and businessdevelopment roles, including Senior Vice President of Business Development as well as President and Chief Financial Officer of its client-focused LoyaltyServices subsidiary. 33 PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Information for Common StockOur common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “MDRX.” The following table sets forth, for the periodsindicated, the high and low intra-day sales prices per share of our common stock as reported on Nasdaq. High Low Last Fiscal Year 2017 Quarter Ended December 31, 2017 $15.20 $12.46 $14.55 September 30, 2017 $14.45 $11.65 $14.23 June 30, 2017 $13.08 $11.25 $12.76 March 31, 2017 $12.91 $10.24 $12.68 Fiscal Year 2016 Quarter Ended December 31, 2016 $13.51 $9.80 $10.21 September 30, 2016 $15.17 $12.40 $13.17 June 30, 2016 $14.06 $11.67 $12.70 March 31, 2016 $14.96 $11.47 $13.21Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesOn November 17, 2016, we announced that our Board approved a new stock purchase program under which we may repurchase up to $200 million ofour common stock through December 31, 2019. During 2017, we purchased 1.0 million shares of our common stock under the new program for a total of$12.1 million. No shares were repurchased during the fourth quarter of 2017. Any share repurchase transactions may be made through open markettransactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means, subject to our workingcapital needs, cash requirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of ourcommon stock, and other factors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at anytime.Dividend PolicyWe have not declared or paid cash dividends on our shares of common stock for the last two years and currently do not intend to declare or pay cashdividends on our shares of common stock in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board andwill depend upon our results of operations, financial condition, current and anticipated cash needs, contractual restrictions, restrictions imposed byapplicable law and other factors that our Board deems relevant. The covenants in the Senior Secured Credit Facility (as defined below) include a restrictionon our ability to declare dividends and other payments in respect of our capital stock. See Note 6, “Debt,” to our consolidated financial statements includedin Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for further information regarding our Senior Secured Credit Facility.StockholdersAccording to the records of our transfer agent, as of February 21, 2018, there were 379 registered stockholders of record of our common stock,including banks, brokers and other nominees who hold shares of our common stock on behalf of an indeterminate number of beneficial owners. 34 Performance GraphThe following graph compares the cumulative 5-Year total return to stockholders on our common stock relative to the cumulative total returns of theNasdaq Composite index and the Nasdaq Health Services index for the period commencing on December 31, 2012 through December 31, 2017, andassuming an initial investment of $100. Data for the Nasdaq Composite index and the Nasdaq Health Services index assumes reinvestment of dividends. Thefollowing will not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act of 1933, as amended,except to the extent we specifically incorporate it by reference into such filings. Note that historic stock price performance is not necessarily indicative offuture stock price performance. 2012 2013 2014 2015 2016 2017 Allscripts Healthcare Solutions, Inc. 100.00 164.12 135.56 163.27 108.39 154.46 Nasdaq Composite 100.00 141.63 162.09 173.33 187.19 242.29 Nasdaq Health Services 100.00 139.64 173.97 187.09 155.05 177.93 35 Item 6. Selected Financial DataThe selected consolidated financial data shown below should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” and Part II, Item 8, “Financial Statements and Supplementary Data” in this Form 10-K to fully understandfactors that may affect the comparability of the information presented below. The consolidated statements of operations data for the years endedDecember 31, 2017, 2016 and 2015 and the balance sheet data as of December 31, 2017 and 2016 are derived from our audited consolidated financialstatements included elsewhere in this Form 10-K. The consolidated statements of operations data for the years ended December 31, 2014 and 2013 and thebalance sheet data as of December 31, 2015, 2014 and 2013 are derived from audited consolidated financial statements that are not included in this Form 10-K. The historical results are not necessarily indicative of results to be expected for any future period. Year Ended December 31, (In thousands, except per share amounts) 2017(1) 2016(2) 2015(3) 2014 2013(4) Consolidated Statements of Operations Data: Revenue $1,806,342 $1,549,899 $1,386,393 $1,377,873 $1,373,061 Cost of revenue 1,024,181 878,860 805,828 831,889 838,605 Gross profit 782,161 671,039 580,565 545,984 534,456 Selling, general and administrative expenses 486,271 392,865 339,175 358,681 419,599 Research and development 220,219 187,906 184,791 192,821 199,751 Asset impairment charges 0 4,650 1,544 2,390 11,454 Amortization of intangible and acquisition-related assets 33,754 25,847 23,172 31,280 31,253 Income (loss) from operations 41,917 59,771 31,883 (39,188) (127,601)Interest expense (87,479) (68,141) (31,396) (29,297) (28,055)Other income (expense), net 413 1,087 2,183 766 7,310 Impairment of and losses on long-term investments (165,290) 0 0 0 0 Equity in net income (loss) of unconsolidated investments 821 (7,501) (2,100) (398) 0 (Loss) income from continuing operations before income taxes (209,618) (14,784) 570 (68,117) (148,346)Income tax benefit (provision) 50,767 17,814 (2,626) 1,664 44,320 (Loss) income from continuing operations, net of tax (158,851) 3,030 (2,056) (66,453) (104,026)Income from discontinued operations, net of tax 4,676 0 0 0 0 Net (loss) income (154,175) 3,030 (2,056) (66,453) (104,026)Less: Net loss (income) attributable to non-controlling interest 1,566 (146) (170) 0 0 Less: Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart (43,850) (28,536) 0 0 0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders $(196,459) $(25,652) $(2,226) $(66,453) $(104,026) Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share: Basic: Continuing operations $(1.12) $(0.14) $(0.01) $(0.37) $(0.59)Discontinued operations $0.03 $0.00 $0.00 $0.00 $0.00 Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $(1.09) $(0.14) $(0.01) $(0.37) $(0.59) Diluted: Continuing operations $(1.12) $(0.14) $(0.01) $(0.37) $(0.59)Discontinued operations $0.03 $0.00 $0.00 $0.00 $0.00 Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $(1.09) $(0.14) $(0.01) $(0.37) $(0.59)_____________________(1)Results of operations for the year ended December 31, 2017 include the results of operations of: (i) Enterprise Information Solutions (“EIS”) subsequent to the date ofacquisition, which was October 2, 2017; (ii) NantHealth’s provider and patient engagement solutions business for the period subsequent to the date of acquisition, whichwas August 25, 2017; (iii) DeVero, Inc. for the period subsequent to the date of acquisition, which was July 17, 2017; and (iv) a third party for the period subsequent to thedate of acquisition, which was March 31, 2017.(2)Results of operations for the year ended December 31, 2016 include the results of operations of: (i) a third party for the period subsequent to the date of acquisition, whichwas December 2, 2016; (ii) HealthMEDX for the period subsequent to the date of acquisition, which was October 27, 2016; (iii) a third party for the period subsequent tothe date of acquisition, which was October 14, 2016; (iv) a third party for the period subsequent to the date of acquisition of a controlling interest, which was September 8,2016; and (v) Netsmart for the period subsequent to the date of the acquisition, which was April 19, 2016.(3)Results of operations for the year ended December 31, 2015 include the results of operations of a third party for the period subsequent to the date of acquisition of amajority interest, which was April 17, 2015. 36 (4)Results of operations for the year ended December 31, 2013 include the results of operations of dbMotion and Jardogs for the period subsequent to the date of theacquisitions, which was, in each case, March 4, 2013. As of December 31, (In thousands) 2017 2016 2015 2014(1) 2013(1) Consolidated Balance Sheet Data: Cash, cash equivalents and marketable securities $162,498 $96,610 $116,873 $54,478 $64,283 Working capital (deficit) (22,433) (62,744) 25,389 (34,183) (32,688)Goodwill and intangible assets, net 2,831,825 2,665,455 1,570,247 1,604,108 1,645,556 Total assets 4,230,150 3,832,159 2,681,948 2,464,330 2,548,151 Long-term debt 1,531,918 1,294,771 612,405 539,193 533,603 Redeemable convertible non-controlling interest - Netsmart 431,535 387,685 0 0 0 Total stockholders’ equity 1,160,072 1,273,201 1,419,073 1,284,220 1,318,145_____________________(1)The balance sheet data as of December 31, 2014 and 2013 has been restated and reflects the retrospective adoption of ASU 2015-03, Simplifying the Presentation of DebtIssuance Costs and ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8,“Financial Statements and Supplementary Data” of this Form 10-K under the heading “Financial Statements and Supplementary Data” and the otherfinancial information that appears elsewhere in this Form 10-K. We assume no obligation to revise or update any forward-looking statements for anyreason, except as required by law.OverviewOur Business and Regulatory EnvironmentWe deliver information technology (“IT”) solutions and services to help healthcare organizations achieve optimal clinical, financial and operationalresults. 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. Wehelp our clients improve the quality and efficiency of health care with solutions that include electronic health records (“EHRs”), connectivity, private cloudhosting, outsourcing, analytics, patient engagement, clinical decision support and population health management.Our solutions empower healthcare professionals with the data, insights and connectivity to other caregivers they need to succeed in an industry that israpidly changing from fee-for-service models to fee-for-value advanced payment models. We believe we offer some of the most comprehensive solutions inour industry today. Healthcare organizations can effectively manage patients and patient populations across all care settings using a combination of ourphysician, hospital, health system, post-acute care and population health management products and services. We believe these solutions will help transformhealth care as the industry seeks new ways to manage risk, improve quality and reduce costs.Globally, healthcare providers face an aging population and the challenge of caring for an increasing number of patients with chronic diseases. At thesame time, practitioners worldwide are also under increasing pressure to demonstrate the delivery of high quality care at lower costs. Population healthmanagement, analytics, connectivity based on open Application Programming Interfaces (“APIs”), and patient engagement are strategic imperatives that canhelp address these challenges. In the United States, for example, such initiatives will be critical tools for success under the framework of the new QualityPayment Program (“QPP”), launched by the Centers for Medicare & Medicaid Services (“CMS”) in response to the passage of the Medicare Access and CHIPReauthorization Act (“MACRA”). As healthcare providers and payers migrate from volume-based to value-based care delivery, interoperable solutions thatare connected to the consumer marketplace are the key to market leadership in the new healthcare reality.We believe our solutions are delivering value to our clients by providing them with powerful connectivity, patient engagement tools and carecoordination tools, enabling United States users to successfully participate in alternate payment models that reward high value care delivery. Populationhealth management is commonly viewed as one of the critical next frontiers in healthcare delivery, and we expect this rapidly emerging area to be a keydriver of our future growth, both domestically and globally.Recent advances in molecular science and computer technology are creating opportunities for the delivery of personalized medicine solutions. Webelieve these solutions will transform the coordination and delivery of health care, ultimately improving patient outcomes. 37 Specific to the United States, the healthcare IT industry in which we operate is in the midst of a period of rapid evolution, primarily due to new lawsand regulations, as well as changes in industry standards. Various incentives that exist today (including the EHR Incentive Program (a.k.a. Meaningful Use)and alternative payment models that reward high value care delivery) are rapidly moving health care toward a time where EHRs are as common as practicemanagement systems in all provider offices. As a result, we believe that legislation, such as the aforementioned MACRA, as well as other government-driveninitiatives, possibly at the state level, will continue to affect healthcare IT adoption and expansion, including products and solutions like ours. We alsobelieve that we are well-positioned in the market to take advantage of the ongoing opportunity presented by these changes.Given that we expect CMS will release further future regulations related to EHRs, even as we comply with previously published rules associated withthe QPP, as well as Stage 3 of the Meaningful Use program for those organizations not eligible for the QPP, our industry is preparing for additional areas inwhich we must execute compliance. Similarly, our ability to achieve applicable product certifications, any changing frequency of the Office of the NationalCoordinator for Health Information Technology (“ONC”) certification program, and the length, if any, of additional related development and other effortsrequired to meet regulatory standards could materially impact our capacity to maximize the market opportunity. All of our market-facing EHR solutions, aswell as the Allscripts EDTM, dbMotion and FollowMyHealth® products, have successfully completed the testing process and are certified as 2015 Edition-compliant by an ONC-Authorized Certification Body, in accordance with the applicable provider or hospital certification criteria adopted by the UnitedStates Secretary of Health and Human Services.Conversations around the Medicare Sustainable Growth Rate reimbursement model concluded in the United States Congress in 2015 when theMACRA was passed, which further encouraged the adoption of health IT necessary to satisfy new requirements more closely associating the report of qualitymeasurements to Medicare payments. With the finalization of the rule for the QPP in 2017, providers accepting payment from Medicare will have anopportunity to select one of two payment models: the Merit-based Incentive Payment System (“MIPS”) or an Advanced Alternative Payment Model(“APM”). Both of these programs will require increased reporting on quality measures; additionally, the MIPS consolidates several preexisting incentiveprograms, including Meaningful Use and Physician Quality Reporting System, under one umbrella, as required by statute. The implementation of this newlaw could drive additional interest in our products among providers who were not eligible for or chose not to participate in the Health InformationTechnology for Economic and Clinical Health Act (“HITECH”) incentive program but now see a new reason to adopt EHRs and other health informationtechnologies or by those needing to purchase more robust systems to help comply with more complex MACRA requirements. Regulations are expected to bereleased in the fourth quarter of each year clarifying requirements related to reporting and quality measures, which will enable physician populations andhealthcare organizations to make strategic decisions about the purchase of analytic software or other solutions important to comply with the new law andassociated regulations. HITECH resulted in additional related new orders for our EHR products, and we believe that the MACRA could drive purchases of not only EHRs butadditional technologies necessary in advanced payment models. Large physician groups will continue to purchase and enhance their use of EHR technology,though the number of very large practices with over 100 physicians that have not yet acquired such technology is quickly decreasing. Such practices maychoose to replace older EHR technology in the future as regulatory requirements (such as those related to QPP-related programs for Advanced APMs) andbusiness realities dictate the need for updates and upgrades, as well as additional features and functionality. Additionally, we believe that a number ofcompanies who certified their EHR products for Stage 1 or Stage 2 of Meaningful Use have and will continue to demonstrate that they have not been able tocomply with the requirements for the 2015 Edition, which continues to present additional opportunities in the replacement market, particularly in the smallerphysician space. As incentive payments wind down and shifts in policies related to payment adjustments from the current presidential Administration in theUnited States is revealed, the role of commercial payers and their continued expansion of alternative payment models, as well as the anticipated growth inMedicaid payment models, are expected to provide additional incentives for purchase and expansion.We also continue to see activity in local community-based buying, whereby individual hospitals, health systems and integrated delivery networkssubsidize the purchase of EHR licenses or related services for local, affiliated physicians and physicians across their employed physician base in order toleverage buying power and help those practices take advantage of payment reform opportunities. This activity has also resulted in a pull-through effect wheresmaller practices affiliated with a community hospital are motivated to participate in the incentive program, while the subsidizing health system expandsconnectivity within the local provider community. We believe that the 2013 extension of exceptions to the Stark Law and Anti-Kickback statutes, whichallowed hospitals and other organizations to subsidize the purchase of EHRs, will continue to contribute to the growth of this market dynamic. We alsobelieve that new orders driven by the MACRA legislation and related to EHR and community-based activity will continue to come in as physicians in thosesmall- and medium-sized practices who have not yet participated seek to avoid payment adjustments stemming from the QPP. The associated challenge weface is to successfully position, sell, implement and support our products to hospitals, health systems or integrated delivery networks that subsidize theiraffiliated physicians. We believe the community programs we have in place will help us penetrate these markets.We believe we have taken and continue to take the proper steps to maximize the opportunity presented by the QPP and other new payment programs.However, given the effects the laws are having on our clients, there can be no assurance that they will result in significant new orders for us in the near term,and if they do, that we will have the capacity to meet the additional market demand in a timely fashion. 38 Additionally, other public laws to reform the United States healthcare system contain various provisions which may impact us and our clients.Continued decisions by the current presidential Administration and Congress to alter the implementation of the Patient Protection and Affordable Care Act(as amended, the “PPACA”) creates uncertainty for us and for our clients for the near term. Some laws currently in place may have a positive impact byrequiring the expanded use of EHRs, quality measurement and analytics tools to participate in certain federal, state or private sector programs. Others, suchas the repeal of or adjustments made to the PPACA by the current presidential Administration and Congress, laws or regulations mandating reductions inreimbursement for certain types of providers, decreasing insurance coverage of patients, decisions not to continue policies from the previous Administration,or increasing regulatory oversight of our products or our business practices, may have a negative impact by reducing the resources available to purchase ourproducts. Increases in fraud and abuse enforcement and payment adjustments for non-participation in certain programs or overpayment of certain incentivepayments may also adversely affect participants in the healthcare sector, including us. Generally, Congressional oversight of EHRs and health informationtechnology has increased in recent years, including a specific focus on perceived interoperability failures in the industry, and any contributing factors to suchfailures, which could impact our clients and our business. While passage of the 21st Century Cures Act in December 2016, addressed concerns aboutinteroperability, and Congressional focus on repealing or adjusting the PPACA continues, the government’s fraud and abuse enforcement activity is notlikely to decrease significantly, as evidenced by the fact that several EHR vendors have received CIDs related to their business practices.Starting October 1, 2015, all entities covered by HIPAA were required to have upgraded to the tenth revision of the International StatisticalClassification of Diseases and Related Health Problems promulgated by the World Health Organization, also known as ICD-10, for use in reporting medicaldiagnoses and inpatient procedures. These changes in coding standards presented a significant opportunity for our clients in the United States to get to themost advanced versions of our products, but also posed a challenge due to the scale of the changes for the industry, particularly among smaller independentphysician practices. New payment and delivery system reform programs, including those related to the Medicare program, are also increasingly being rolledout at the state level through Medicaid administrators, as well as through the private sector, presenting additional opportunities for us to provide software andservices to our clients who participate.Summary of ResultsDuring 2017, we continued to make incremental progress on our key strategic, financial and operational imperatives aimed at driving higher clientsatisfaction, improving our competitive position by expanding the depth and breadth of our products and, ultimately, positioning the company forsustainable long-term growth both domestically and globally. In that regard, we had success across the below key areas that we expect will continue to driveour future growth. These included, among others: •U.S. Core Solutions and Services: During 2017, we were able to successfully grow and expand our relationships with many of our acute clientsas they sought to consolidate IT providers, reduce total cost of ownership and acquire additional value-based solutions. We also saw continueddemand, albeit to a smaller degree, in the independent ambulatory market for replacement EHR systems. Finally, we expanded our client base forrevenue cycle management services. •Value-based Care: During 2017, as the healthcare industry continues its transition toward value-based care model, we continued to expand ourclient base for our population health management portfolio CareInMotion™ platform, which enables such transition for our clients bydelivering real-time actionable information at the point of care. We also experienced growth in our payer and life-sciences business. •Global Presence: During 2017, we expanded our presence internationally and signed a number of new clients, primarily in the United Kingdomand Asia Pacific region. We believe that this success is partly due to our continued investment in our solutions, our improving financialperformance and competitive position. •Post-Acute Care: During 2017, we saw continued strength in demand for Netsmart’s technology and services from behavioral-health, socialservices and long-term and home health care community providers.Total revenue for the year ended December 31, 2017 was $1.8 billion, an increase of 16% compared with the prior year. For the year ended December31, 2017, software delivery, support and maintenance revenue and client services revenue totaled $1.2 billion, for an increase of 16%, and $632 million, foran increase of 17%, respectively, as compared with the prior year.Gross profit increased during the year ended December 31, 2017 compared with the prior year, primarily due to improved profitability from ourrecurring subscription-based software sales and recurring client services, particularly private-cloud hosting, as we continue to expand our customer base forthese services. Gross margin remained unchanged at 43.3% compared with prior year primarily due to higher amortization of software development andacquisition-related assets, which more than offset improvement in the underlying gross margin. 39 Our contract backlog as of December 31, 2017 was at a record high of $4.6 billion, an increase of 15% compared with backlog as of December 31,2016. The increase in backlog is partly due to backlog from the EIS Business (defined below) starting in the fourth quarter of 2017. Our bookings, whichreflect the value of executed contracts for software, hardware, other client services, private-cloud hosting, outsourcing and subscription-based services,totaled $1.3 billion for both the years ended December 31, 2017 and 2016, respectively. The composition of our bookings for the years ended December 31,2017 and 2016, was also unchanged with 48% of client services-related bookings and 52% of software delivery-related bookings.On August 25, 2017, the Company completed the acquisition of certain assets relating to NantHealth’s provider/patient engagement solutionsbusiness. The consideration for the transaction was the 15,000,000 shares of common stock of NantHealth that had been owned by the Company. Inconnection with this transaction, during 2017 we recognized non-cash impairment loss totaling $162.9 million related to decline in the value of NantHealthcommon stock.On October 2, 2017, Allscripts Healthcare, LLC, a wholly-owned subsidiary of the Company (“Healthcare LLC”), completed the acquisition ofMcKesson Corporation’s (“McKesson’s”) Enterprise Information Solutions (EIS) Business division (the “EIS Business”), which provides certain softwaresolutions and services to hospitals and health systems, by acquiring all of the outstanding equity interests of two indirect, wholly-owned subsidiaries ofMcKesson for an aggregate purchase price of $185 million, subject to adjustments for net working capital and net debt. The purchase price was fundedthrough incremental borrowings under our debt facilities.Revenues and ExpensesRevenues are derived 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.Cost of revenue consists primarily of salaries, bonuses and benefits for our billable professionals, third-party software costs, third-party transactionprocessing and consultant costs, amortization of acquired proprietary technology and capitalized software development costs, depreciation and other directengagement costs.Selling, general and administrative expenses consist primarily of salaries, bonuses and benefits for management and administrative personnel, salescommissions and marketing expenses, facilities costs, depreciation and amortization and other general operating expenses.Research and development expenses consist primarily of salaries, bonuses and benefits for our development personnel, third‑party contractor costs andother costs directly or indirectly related to development of new products and upgrading and enhancing existing products.Asset impairment charges consist primarily of non-cash charges related to our decision to discontinue several software development projects, therecognition of an other-than-temporary impairment of one of our cost method investments and the write-off of certain deferred costs that were determined tobe unrealizable.Amortization of intangible and acquisition-related assets consists of amortization of customer relationships, trade names and other intangiblesacquired through business combinations accounted under the purchase method of accounting.Interest expense consists primarily of interest on the 1.25% Notes, outstanding debt under our Senior Secured Credit Facility and the NetsmartRevolving Facility (as defined below), and the amortization of debt discounts and debt issuance costs.Other income, net consists primarily of realized gains on from the sale of investments, miscellaneous receipts and interest earned on cash andmarketable securities.Impairment of and losses on long-term investments primarily consists of other-than-temporary and realized losses associated with our available for salemarketable securities.Equity in net income (loss) of unconsolidated investments represents our share of the equity earnings (losses) of our investments in third partiesaccounted for under the equity method, including the amortization of cost basis adjustments.Income from discontinued operations includes the results of operations of two solutions acquired with the EIS Business which are to be sunset after thefirst quarter of 2018. 40 Critical Accounting Policies and EstimatesThe preparation of our consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions thataffect the amounts reported and disclosed in the financial statements and the accompanying notes. The accounting policies and estimates discussed in thissection are those that we consider to be particularly critical to an understanding of our consolidated financial statements because their application involvessignificant judgment regarding the effect of inherently uncertain matters on our financial results. Actual results could differ materially from these estimatesunder different assumptions or conditions.Revenue RecognitionRevenue represents the fair value of consideration received or receivable from clients for goods and services provided by us. Software deliveryrevenue consists of all of our proprietary software sales (either as a perpetual license sale or under a subscription delivery model), transaction-related revenueand the resale of hardware. Support and maintenance revenue consists of revenue from post contract client support and maintenance services. Client servicesrevenue consists of revenue from managed services solutions, such as private cloud hosting, outsourcing and revenue cycle management, as well as otherclient services or project-based revenue from implementation, training and consulting services. For some clients, we remotely host the software applicationslicensed from us using our own or third-party servers, which saves these clients the cost of procuring and maintaining hardware and related facilities. Forother clients, we offer an outsourced solution in which we assume partial to total responsibility for a healthcare organization’s IT operations using ouremployees.Revenue from software licensing arrangements where the service element is not considered essential to the functionality of the other elements of thearrangement is recognized upon delivery of the software or as services are performed, provided persuasive evidence of an arrangement exists, fees areconsidered fixed or determinable, and collection of the receivable is probable. The revenue recognized for each separate element of a multiple-elementsoftware contract is based upon vendor-specific objective evidence of fair value (“VSOE”), which is based upon the price the client is required to pay whenthe element is sold separately or renewed. For arrangements in which VSOE only exists for the undelivered elements, the delivered elements (generallysoftware licenses) are accounted for using the residual method.Revenue from software licensing arrangements, where the service element is considered essential to the functionality of the other elements of thearrangement, is accounted for on an input basis under the percentage of completion accounting method using actual hours worked as a percentage of totalexpected hours required by the arrangement, provided that persuasive evidence of an arrangement exists, fees are considered fixed or determinable, andcollection of the receivable is probable. Maintenance and support associated with these agreements is recognized over the term of the support agreementbased on VSOE of the maintenance revenue, which is based on contractual renewal rates. For presentation in the statement of operations, consideration fromagreements accounted for under the percentage of completion accounting method is allocated between software delivery and client services revenue based onVSOE of our hourly services rate multiplied by the amount of hours performed with the residual amount allocated to the software license fee.Fees related to software-as-a-service (“SaaS”) arrangements are recognized as revenue ratably over the contract terms beginning on the date oursolutions are made available to clients. These arrangements include client services fees related to the implementation and set-up of our solutions and aretypically billed upfront and recorded as deferred revenue until our solutions are made available to the client. The implementation and set-up fees arerecognized as revenue ratably over the estimated client relationship period. The estimated length of a client relationship period is based on our experiencewith client contract renewals and consideration of the period over which such clients use our SaaS solutions.Software private cloud hosting services are provided to clients that have purchased a perpetual license to our software solutions and contracted with usto host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloudhosting period without significant penalty and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated thirdparty to host the software. Private cloud hosting services are not deemed to be essential to the functionality of the software or other elements of thearrangement; accordingly, for these arrangements, we recognize software license fees as software delivery revenue upon delivery, assuming all other revenuerecognition criteria have been met, and separately recognize fees for the private cloud hosting services as client services revenue over the term of the privatecloud hosting arrangement. 41 We also enter into multiple-element arrangements that may include a combination of various software-related and non-software-related products andservices. Management applies judgment to ensure appropriate accounting for multiple deliverables, including the allocation of arrangement considerationamong multiple units of accounting, the determination of whether undelivered elements are essential to the functionality of delivered elements, and thetiming of revenue recognition, among others. In such arrangements, we first allocate the total arrangement consideration based on a selling price hierarchy atthe inception of the arrangement. The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third-partyevidence of fair value if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence of fair value is available (discussion as tohow we determine VSOE, third-party evidence of fair value and estimated selling price is provided below). Upon allocation of the arrangement considerationto the software elements as a whole and individual non-software elements, we then further allocate consideration within the software group to the respectiveelements following higher-level, industry-specific guidance and our policies described above. After the arrangement consideration has been allocated to thevarious elements, we account for each respective element in the arrangement as described above.To determine the selling price in multiple-element arrangements, we establish VSOE using the price charged for a deliverable when sold separatelyand contractual renewal rates for maintenance fees. For non-software multiple element arrangements, third-party evidence of fair value is established byevaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated clients. If we are unable todetermine the selling price because VSOE or third-party evidence of fair value does not exist, we determine an estimated selling price by considering severalexternal and internal factors including, but not limited to, pricing practices, margin objectives, competition, client demand, internal costs and overalleconomic trends. The determination of an estimated selling price is made through consultation with and approval by our management, taking intoconsideration our go-to-market strategy. As our, or our competitors’, pricing and go-to-market strategies evolve, we may modify our pricing practices in thefuture. These events could result in changes to our determination of VSOE, third-party evidence of fair value and estimated selling price. Selling prices areanalyzed on an annual basis or more frequently if we experience significant changes in our selling prices.For those arrangements where the deliverables do not qualify as separate units of accounting, revenue recognition is evaluated for the combineddeliverables as a single unit of accounting and the recognition pattern of the final deliverable will dictate the revenue recognition pattern for the single,combined unit of accounting. Changes in circumstances and client data may result in a requirement to either separate or combine deliverables, such that adelivered item could now meet the separation criteria and qualify as a separate unit of accounting which may lead to an upward or downward adjustment tothe amount of revenue recognized under the arrangement on a prospective basis.We assess whether fees are considered fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirementsare met. Our payment arrangements with clients typically include milestone-based software license fee payments and payments based on delivery for servicesand hardware.While most of our arrangements include short-term payment terms, we periodically provide extended payment terms to clients from the date ofcontract signing. We do not recognize revenue under extended payment term arrangements until such payments become due. In certain circumstances, whereall other revenue recognition criteria have been met, we occasionally offer discounts to clients with extended payment terms to accelerate the timing of whenpayments are made. Changes to extended payment term arrangements have not had a material impact on our consolidated results of operations.Maintenance fees are recognized ratably over the period of the contract based on VSOE, which is based on contractual renewal rates. Revenue fromelectronic data interchange services is recognized as services are provided and is determined based on the volume of transactions processed or estimatedselling price.We provide outsourcing services to our clients under arrangements that typically range from three to ten years in duration. Under these arrangementswe assume full, partial or transitional responsibilities for a healthcare organization’s IT operations using our employees. Our outsourcing services includefacilities management, network outsourcing and transition management. Revenue from these arrangements is recognized subsequent to the transition periodas services are performed.Revenue is recognized net of any taxes collected from clients and subsequently remitted to governmental authorities. We record as revenue anyamounts billed to clients for shipping and handling costs and record as cost of revenue the actual shipping costs incurred.We record reimbursements for out-of-pocket expenses incurred as client services revenue in our consolidated statement of operations. 42 Allowance for Doubtful Accounts ReceivableWe rely on estimates to determine our bad debt expense and the adequacy of our allowance for doubtful accounts. These estimates are based on ourhistorical experience and management’s assessment of a variety of factors related to the general financial condition of our clients, the industry in which weoperate and general economic conditions. If the financial condition of our clients were to deteriorate, resulting in an impairment of their ability to makepayments, additional allowances and related bad debt expense may be required.Business CombinationsGoodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assetsacquired and the liabilities assumed. While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately valueassets acquired, including intangible assets, and the liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject torefinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair valuesof the assets acquired and the liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period or finaldetermination of the values of assets acquired or the liabilities assumed, whichever comes first, any subsequent adjustments are reflected in our consolidatedstatement of operations.Goodwill and Intangible AssetsGoodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are tested forimpairment annually or between annual tests when an impairment indicator exists. If an optional qualitative goodwill impairment assessment is notperformed, we are required to determine the fair value of each reporting unit. If a reporting unit’s fair value is lower than its carrying value, we must determinethe amount of implied goodwill that would be established if the reporting unit was hypothetically acquired on the impairment test date. If the carryingamount of a reporting unit’s goodwill exceeds the amount of implied goodwill, an impairment loss equal to the excess would be recorded. The recoverabilityof indefinite-lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carryingvalue of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded.The determination of the fair value of our reporting units is based on a combination of a market approach, that considers benchmark company marketmultiples, and an income approach, that utilizes discounted cash flows for each reporting unit and other Level 3 inputs. Under the income approach, wedetermine fair value based on the present value of the most recent cash flow projections for each reporting unit as of the date of the analysis, and calculate aterminal value utilizing a terminal growth rate. The significant assumptions under this approach include, among others: income projections, which aredependent on sales to new and existing clients, new product introductions, client behavior, competitor pricing, operating expenses, the discount rate and theterminal growth rate. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as our expectationsof future performance and the expected economic environment, which are partly based on our historical experience. Our estimates are subject to change giventhe inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates thatwould be utilized by a hypothetical market participant. As part of the goodwill impairment testing, we also consider our market capitalization in assessingthe reasonableness of the fair values estimated for our reporting units.All of our goodwill is assigned to reporting units where it is tested for impairment. The reporting units evaluated for goodwill impairment weredetermined to be the same as our operating segments. We performed the annual impairment tests of our reporting units as of October 1, 2017. During the yearended December 31, 2017, the annual impairment testing date of the Netsmart reporting unit was changed to October 1, 2017 to coincide with Allscriptsannual testing date. The prior annual impairment testing date for the Netsmart unit was December 31, 2016. We believe this change in testing date does notrepresent a material change to our method of applying an accounting principle. All of the annual impairment tests consisted of quantitative analyses. The fairvalue of each of our reporting units substantially exceeded its carrying value and no indicators of impairment were identified as a result of the annualimpairment test. If future anticipated cash flows from our reporting units are significantly lower or materialize at a later time than projected, our goodwillcould be impaired, which could result in significant charges to earnings.Accounting guidance also requires that definite-lived intangible assets be amortized over their respective estimated useful lives and reviewed forimpairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We estimate the useful lives of ourintangible assets and ratably amortize the value over the estimated useful lives of those assets. If the estimates of the useful lives should change, we willamortize the remaining book value over the remaining useful lives or, if an asset is deemed to be impaired, a write-down of the value of the asset may berequired at such time. 43 Software Development CostsWe capitalize purchased software upon acquisition if it is accounted for as internal-use or if it meets the future alternative use criteria. We capitalizeincurred labor costs for software development from the time technological feasibility of the software is established, or when the preliminary project phase iscompleted in the case of internal use software, until the software is available for general release. Research and development costs and other computer softwaremaintenance costs related to software development are expensed as incurred. We estimate the useful life of our capitalized software and amortize its valueover that estimated life. If the actual useful life is shorter than our estimated useful life, we will amortize the remaining book value over the remaining usefullife or the asset may be deemed to be impaired and, accordingly, a write-down of the value of the asset may be recorded as a charge to earnings.The carrying value of capitalized software is dependent on the ability to recover its value through future revenue from the sale of the software. At eachbalance sheet date, the unamortized capitalized costs of a software product are compared with the net realizable value of that product. The net realizablevalue is the estimated future gross revenues from that product reduced by the estimated future costs of completing and disposing of that product, includingthe costs of performing maintenance and client support required to satisfy our responsibility at the time of sale. The amount by which the unamortizedcapitalized costs of a software product exceed the net realizable value of that asset is written off. If we determine in the future that the value of the capitalizedsoftware could not be recovered, a write-down of the value of the capitalized software to its recoverable value may be recorded as a charge to earnings.Income TaxesWe account for income taxes using the liability method, which requires the recognition of deferred tax assets or liabilities for the tax-effectedtemporary differences between the financial reporting and tax bases of our assets and liabilities and for net operating loss and tax credit carryforwards. Theobjectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities andassets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required inaddressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The deferred tax assets arerecorded net of a valuation allowance when, based on the weight of available evidence, we believe it is more likely than not that some portion or all of therecorded deferred tax assets will not be realized in future periods. We consider many factors when assessing the likelihood of future realization of our deferredtax assets, including recent cumulative earnings experience, expectations of future taxable income, the ability to carryback losses and other relevant factors.In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. Achange in the assessment of the outcomes of such matters could materially impact our consolidated financial statements.The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities foranticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes may be required. If we ultimately determine thatpayment of these amounts is unnecessary, then we reverse the liability and recognize a tax benefit during the period in which we determine that the liabilityis no longer necessary. We also recognize tax benefits to the extent that it is more likely than not that our positions will be sustained if challenged by thetaxing authorities. To the extent, we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our liabilities,our effective tax rate in a given period may be materially affected. An unfavorable tax settlement would require cash payments and may result in an increasein our effective tax rate in the year of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the year ofresolution. We report interest and penalties related to uncertain income tax positions in the income tax (provision) benefit line of our consolidated statementsof operations.We file income tax returns in the United States federal jurisdiction, numerous states in the United States and multiple countries outside of the UnitedStates.Fair Value MeasurementsFair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independentsources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information. We utilize valuationtechniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair values of assets and liabilities required to bemeasured at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value in one of the following threecategories:Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Our Level 1 financialinstruments included our investment in NantHealth common stock. Refer to Note 10, “Accumulated Other Comprehensive Loss,” for further informationregarding our available for sale marketable securities. 44 Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Our Level 2derivative financial instruments include foreign currency forward contracts valued based upon observable values of spot and forward foreign currencyexchange rates. Refer to Note 11, “Derivative Financial Instruments,” for further information regarding these derivative financial instruments.Level 3: Unobservable inputs that are significant to the fair value of the asset or liability, and include situations where there is little, if any, marketactivity for the asset or liability. Our Level 3 financial instruments include derivative financial instruments comprising the 1.25% Call Option asset and the1.25% embedded cash conversion option liability that are not actively traded. These derivative instruments were designed with the intent that changes intheir fair values would substantially offset, with limited net impact to our earnings. Therefore, we believe the sensitivity of changes in the unobservableinputs to the option pricing model for these instruments is substantially mitigated. Refer to Note 11, “Derivative Financial Instruments,” for furtherinformation regarding these derivative financial instruments. The sensitivity of changes in the unobservable inputs to the valuation pricing model used tovalue these instruments is not material to our consolidated results of operations.Recent Accounting PronouncementsFor information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements,refer to Note 1, “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in Part II, Item 8, “FinancialStatements and Supplementary Data” of this Form 10-K. 45 Overview of Consolidated Results 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue: Software delivery, support and maintenance $1,174,722 $1,012,352 $918,430 16.0% 10.2%Client services 631,620 537,547 467,963 17.5% 14.9%Total revenue 1,806,342 1,549,899 1,386,393 16.5% 11.8%Cost of revenue: Software delivery, support and maintenance 368,192 331,055 291,804 11.2% 13.5%Client services 541,388 459,174 432,038 17.9% 6.3%Amortization of software development and acquisition-related assets 114,601 88,631 81,986 29.3% 8.1%Total cost of revenue 1,024,181 878,860 805,828 16.5% 9.1%Gross profit 782,161 671,039 580,565 16.6% 15.6%Gross margin % 43.3% 43.3% 41.9% Selling, general and administrative expenses 486,271 392,865 339,175 23.8% 15.8%Research and development 220,219 187,906 184,791 17.2% 1.7%Asset impairment charges 0 4,650 1,544 (100.0%) NM Amortization of intangible and acquisition-related assets 33,754 25,847 23,172 30.6% 11.5%Income (loss) from operations 41,917 59,771 31,883 (29.9%) 87.5%Interest expense (87,479) (68,141) (31,396) 28.4% 117.0%Other income, net 413 1,087 2,183 (62.0%) (50.2%)Impairment of and losses on long-term investments (165,290) 0 0 Equity in net income (loss) of unconsolidated investments 821 (7,501) (2,100) (110.9%) NM (Loss) income before income taxes (209,618) (14,784) 570 NM NM Income tax benefit (provision) 50,767 17,814 (2,626) 185.0% NM Effective tax rate 24.2% 120.5% 460.7% (Loss) income from continuing operations, net oftax (158,851) 3,030 (2,056) NM NM Income from discontinued operations, net of tax 4,676 0 0 NM NM Net (loss) income (154,175) 3,030 (2,056) NM NM Less: Net loss (income) attributable to non-controlling interest 1,566 (146) (170) NM (14.1%)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart (43,850) (28,536) 0 53.7% NM Net loss attributable to AllscriptsHealthcare Solutions, Inc. stockholders $(196,459) $(25,652) $(2,226) NM NMNM—We define “NM” as not meaningful for increases or decreases greater than 200%. 46 Revenue 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue: Software delivery, support and maintenance Recurring revenue $984,934 $846,195 $781,000 16.4% 8.3%Non-recurring revenue 189,788 166,157 137,430 14.2% 20.9%Total software delivery, support and maintenance 1,174,722 1,012,352 918,430 16.0% 10.2%Client services Recurring revenue 420,171 350,559 271,800 19.9% 29.0%Non-recurring revenue 211,449 186,988 196,163 13.1% (4.7%)Total client services 631,620 537,547 467,963 17.5% 14.9%Total revenue $1,806,342 $1,549,899 $1,386,393 16.5% 11.8%Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016The increase in revenue for the year ended December 31, 2017 is primarily due to the consolidation of Netsmart beginning in the second quarter of2016, including the impact of Netsmart’s subsequent acquisitions of HealthMEDX and DeVero, as well as the acquisition of the EIS Business, whichcontributed $104 million of revenue in the fourth quarter of 2017. These increases were partly offset by higher amortization of acquisition-related deferredrevenue adjustments during the year ended December 31, 2017 as compared with the prior year, which totaled $34 million and $26 million, respectively.Software delivery, support and maintenance revenue consists of recurring subscription-based software sales, support and maintenance revenue,recurring transactions revenue, non-recurring perpetual software licenses sales, hardware resale and non-recurring transactions revenue. Client servicesrevenue consists of recurring revenue from managed services solutions, such as outsourcing, private cloud hosting and revenue cycle management, as well asnon-recurring project-based client services revenue. The growth in both recurring and non-recurring software delivery, support and maintenance and clientservices revenue for the year ended December 31, 2017 compared with the prior year was also largely driven by incremental revenue from Netsmart and theEIS Business as well as higher revenue associated with the sale of Allscripts integrated clinical software applications and health management and coordinatedcare solutions, including associated client services to implement and support these solutions.The percentage of recurring and non-recurring revenue of our total revenue was 78% and 22%, respectively, during the year ended December 31,2017, representing a slight shift compared with 77% and 23%, respectively, during the prior year.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015The increase in total revenue reflects additional revenue from the consolidation of Netsmart effective as of April 19, 2016, partly offset by $26 millionof amortization of acquisition-related deferred revenue adjustments during the year ended December 31, 2016. Adjusting for the impact of incrementalrevenue from Netsmart, Inc. and the amortization of acquisition-related deferred revenue adjustments, total revenue during the year ended December 31, 2016increased by 3%, compared with the prior year as higher recurring services revenue and non-recurring software delivery, support and maintenance revenuewere partly offset by lower non-recurring services revenue. The changes in recurring and non-recurring revenue during 2016 compared with the prior yearwere caused by similar drivers, as explained below.Software delivery, support and maintenance revenue consists of recurring subscription-based software sales, support and maintenance revenue,recurring transactions revenue, and non-recurring perpetual software licenses sales, hardware resale and non-recurring transactions revenue. The growth inrecurring and non-recurring software delivery, support and maintenance revenue was largely driven by incremental revenue from Netsmart, Inc. Adjusting forthe impact of such incremental revenue, our recurring revenue increased 1% during the year ended December 31, 2016, compared with the prior year as theexpansion of our client base for our population health management portfolio CareInMotion™ and ambulatory EHR solutions was offset by anticipatedchanges in our client base and a challenging comparison with last year. Support and maintenance revenue can also experience some variability related tocontract restructurings and the achievement of client activation milestones. Adjusting for the impact of incremental revenue from Netsmart, Inc., non-recurring software delivery, support and maintenance revenue increased by 10% during the year ended December 31, 2016 compared with the prior year,primarily driven by higher software license sales of our acute and ambulatory solutions.Client services revenue consists of recurring revenue from managed services solutions, such as outsourcing, private cloud hosting and revenue cyclemanagement, as well as non-recurring project-based client services revenue. The growth in client services revenue was also largely driven by incrementalrevenue from Netsmart, Inc. Adjusting for the impact of such incremental revenue, recurring client services revenue increased by 17% during the year endedDecember 31, 2016 compared with the prior year, primarily due to expanding our outsourcing services at several large clients and adding new outsourcingclients, as well as revenue related to our 47 acquisition of a majority interest in a third party in April 2015, the results of which are consolidated with our financial results from the date of thistransaction. Adjusting for the impact of incremental revenue from Netsmart, Inc., non-recurring revenue declined 15% during the year ended December 31,2016 compared with the prior year, primarily as a result of a decrease in implementation services attributable to fewer large implementations of ourambulatory and acute solutions, changes to our business model requiring less upfront services and some clients choosing to delay upgrade implementationsas they awaited the release of the final CMS rules related to the Quality Payment Program and changes to Stage 3 of the Meaningful Use program.Additionally, 2015 also included the recognition of services revenue upon the achievement of a key implementation milestone with a large client, which didnot recur during 2016. Non-recurring client services revenue can also vary between periods from the timing of implementation services revenue recognitionassociated with large-scale implementation contracts and the achievement of key delivery milestones and the timing of special projects.The percentage of recurring and non-recurring revenue of our total revenue was 77% and 23%, respectively, during the year ended December 31,2016, representing a slight shift compared with 76% and 24%, respectively, during the prior year.Gross Profit 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Total cost of revenue $1,024,181 $878,860 $805,828 16.5% 9.1%Gross profit $782,161 $671,039 $580,565 16.6% 15.6%Gross margin % 43.3% 43.3% 41.9% Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Gross profit increased during the year ended December 31, 2017 compared with the prior year, primarily due to the consolidation of Netsmartbeginning in the second quarter of 2016, including the impact of Netsmart’s subsequent acquisitions of HealthMEDX and DeVero, and the acquisition of theEIS Business in the fourth quarter of 2017. From a revenue mix perspective, gross profit associated with our recurring revenue streams, which include thedelivery of recurring subscription-based software sales, support and maintenance, and recurring client services, particularly private cloud hosting, improvedas we continued to expand our customer base for these services. Gross profit associated with our non-recurring revenue streams, which include non-recurringproject-based client services, perpetual software licenses sales, hardware resale and non-recurring transactions revenue, also improved, primarily driven byhigher gross profit from sales of our population health and post-acute solutions. These increases were partly offset by higher amortization of softwaredevelopment and acquisition-related assets compared with the prior year, including $4 million of additional amortization expense associated with intangibleassets acquired as part of the EIS Business acquisition in 2017.Gross margin remained unchanged primarily due to higher amortization of software development and acquisition-related assets, which more thanoffset improvement in the underlying gross margin. Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Gross profit and gross margin increased during the year ended December 31, 2016 compared with the year ended December 31, 2015. These increaseswere primarily driven by improved profitability from the delivery of recurring client services, particularly private cloud hosting and outsourcing, as wecontinue to expand our customer base for these services. Gross margin associated with non-recurring client services revenue also improved compared with theprior year as the 2016 periods reflect the full effect of cost reduction initiatives completed during the first half of 2015. Additionally, gross profit and grossmargin increased for the year ended December 31, 2016 due to improved profitability associated with recurring subscription-based software as we were ableto generate higher revenue while maintaining a fairly stable cost base to deliver these solutions.Selling, General and Administrative Expenses 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Selling, general and administrative expenses $486,271 $392,865 $339,175 23.8% 15.8%Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Selling, general and administrative expenses increased during the year ended December 31, 2017 compared with the prior year, primarily due tohigher transaction-related, severance and legal expenses mostly related to the acquisition of the EIS Business. Additional personnel expenses fromacquisitions completed during 2016, including the Netsmart Transaction in the second quarter of 2016 as well as Netsmart’s subsequent acquisitions ofHealthMEDX and DeVero, also contributed to the increase in selling, general 48 and administrative expenses.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Selling, general and administrative expenses increased during the year ended December 31, 2016 compared with the year ended December 31, 2015,primarily due to additional expenses from acquisitions completed during 2016, including the Netsmart Transaction in the second quarter of 2016, as well asinvestments to support business growth.Research and Development 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Research and development $220,219 $187,906 $184,791 17.2% 1.7%Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Research and development expenses increased by 17% during the year ended December 31, 2017 compared with the prior year, primarily due tohigher overall personnel costs and additional expenses from the acquisitions of the EIS Business, Netsmart and DeVero, which were partly offset by anincrease in the amount of capitalized software costs in 2017 compared with 2016. The increase in research and development expenses during the year endedDecember 31, 2017 was also partially mitigated by our continued efforts to streamline our operations and improve operational efficiency, includingheadcount actions taken during the second half of 2017. The increase in capitalized software development costs was primarily driven by incrementalinvestments in the emerging areas of precision medicine and cloud-based solution delivery as well as our continued investment in expanding the capabilitiesand functionality of our traditional ambulatory, acute and post-acute platforms. The capitalization of software development costs is highly dependent on thenature of the work being performed and the development status of projects and, therefore, it is common for the amount of capitalized software developmentcosts to fluctuate.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Research and development expenses increased by 2% during the year ended December 31, 2016 compared with the prior year, primarily due to theconsolidation of Netsmart in the second quarter of 2016, which resulted in $9 million of additional costs in 2016. After adjusting for Netsmart, research anddevelopment expenses decreased compared with the prior year due to an increase in the amount of capitalized software costs in 2016 compared with 2015.The increase in capitalized software development costs was primarily driven by incremental investments in the emerging areas of precision medicine andpopulation health analytics as well as our continued investment in expanding the capabilities and functionality of our traditional ambulatory and acuteplatforms, including in response to new regulatory requirements.Asset and Long-term Investment Impairment Charges 2017 % 2016 % Year Ended December 31, Change Change(In thousands) 2017 2016 2015 from 2016 from 2015Asset impairment charges $- $4,650 $1,544 (100.0%) NMImpairment of and losses on long-term investments $165,290 0 0 NM NMYear Ended December 31, 2017 Compared with the Year Ended December 31, 2016During the year ended December 31, 2016, we recorded non-cash asset impairment charges of $2.2 million for the impairment of capitalized softwareas a result of our decision to discontinue several software development projects, $2.1 million for the impairment of one of our cost method equity investmentsand $0.4 million to write down a long-term asset to its estimated net realizable value.During the year ended December 31, 2017, we recognized non-cash charges of $165.3 million including other-than-temporary impairment charges of$144.6 million during the second quarter of 2017 associated with two of the Company’s long-term investments based on management’s assessment of thelikelihood of near-term recovery of the investments’ value. The majority of the impairment charges relate to our previous investment in NantHealth commonstock. During the three months ended September 30, 2017, we realized an additional $20.7 million loss upon the full disposition of the NantHealth commonstock in connection with our acquisition of certain assets related to NantHealth’s provider and patient engagement solutions business. Refer to Note 2,“Business Combinations 49 and Other Investments” and Note 10, “Accumulated Other Comprehensive Loss,” for further information regarding these impairments.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015During the year ended December 31, 2015, we recorded non-cash asset impairment charges of $1.2 million associated with a decline in the value of acommercial agreement and wrote-off $0.3 million of certain deferred costs that were determined to be unrealizable.Amortization of Intangible and Acquisition-Related Assets 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Amortization of intangible and acquisition-related assets $33,754 $25,847 $23,172 30.6% 11.5%Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016The increase in amortization expense for the year ended December 31, 2017 compared with the prior year was primarily due to a full year ofamortization expense associated with the value of intangible assets recognized in connection with the Netsmart Transaction in the second quarter of 2016and the acquisitions of HealthMEDX and controlling interests in third parties during the fourth quarter of 2016. In addition, amortization expense associatedwith intangible assets acquired as part of the EIS Business acquisition in 2017 contributed $2 million of additional expenses. Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015The increase in amortization expense for the year ended December 31, 2016 compared with the year ended December 31, 2015 was primarily due tothe consolidation of Netsmart in the second quarter of 2016, which resulted in $10 million of additional costs in 2016, and additional amortization related tointangible assets associated with our acquisitions of a controlling interest in third parties during the second half of 2016. After adjusting for Netsmart,amortization expense decreased compared with the prior year as several intangible assets were fully amortized in 2015.Interest Expense 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Interest expense $87,479 $68,141 $31,396 28.4% 117.0%Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Interest expense during the year ended December 31, 2017 was higher compared with the prior year primarily due to a full year of interest expenseassociated with Netsmart’s non-recourse debt, including incremental interest on Netsmart’s additional borrowings of $51 million in the third quarter of 2017to fund the DeVero acquisition. Interest expense associated with Allscripts senior secured credit facility also increased primarily due to higher outstandingbalance compared with the year ended December 31, 2016, partly due to additional borrowings of $170 million to finance the acquisition of the EIS Businessduring the fourth quarter of 2017. In addition, the interest rates on Allscripts and Netsmart’s credit facilities was higher during 2017 as compared with 2016.These increases were partly offset by the absence of any debt issue costs write-off during the year ended December 31, 2017.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Interest expense during the year ended December 31, 2016 was higher compared with the prior year primarily due to $39 million of interest expenseassociated with Netsmart’s non-recourse debt incurred since April 19, 2016. The incremental Netsmart interest expense includes $8 million of amortization ofdebt issuance costs, which include $5 million of debt issuance costs written-off in connection with the amendment of Netsmart’s First Lien Credit Agreement(as defined in Note 6, “Debt,” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of thisForm 10-K). After adjusting for Netsmart, interest expense decreased slightly primarily due to lower borrowing costs resulting from the amendment of ourSenior Secured Credit Facility during the third quarter of 2015. 50 Other income, net 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Other income, net $413 $1,087 $2,183 (62.0%) (50.2%)Year Ended December 31, 2017 Compared with the Years Ended December 31, 2016 and 2015Other income, net for the years ended December 31, 2017, 2016 and 2015 consists of miscellaneous receipts. The year ended December 31, 2015 alsoincluded the recognition of unrealized gains from accumulated other comprehensive loss related to our available for sale marketable securities that were soldduring 2015.Equity in Net Income (Loss) of Unconsolidated Investments 2017 % 2016 % Year Ended December 31, Change Change(In thousands) 2017 2016 2015 from 2016 from 2015Equity in net income (loss) of unconsolidated investments $821 $(7,501) $(2,100) (110.9%) NMYear Ended December 31, 2017 Compared with the Years Ended December 31, 2016 and 2015Equity in net income (loss) of unconsolidated investments represents our share of the equity earnings (losses) of our investments in third partiesaccounted for under the equity method, including the amortization of cost basis adjustments. The majority of the amounts recognized during the years endedDecember 31, 2016 and 2015 represent our share of the net losses incurred by NantHealth prior to NantHealth’s initial public offering (“IPO”) in June 2016,including the amortization of cost basis adjustments. Our investment in NantHealth common stock was accounted for as an available-for-sale marketablesecurity after the IPO until the full disposition of the NantHealth common stock in the third quarter of 2017 in connection with our acquisition of certainassets related to NantHealth’s provider and patient engagement solutions business.Income Tax Benefit (Provision) 2017 % 2016 % Year Ended December 31, Change Change(In thousands) 2017 2016 2015 from 2016 from 2015Income tax benefit (provision) $50,767 $17,814 $(2,626) 185.0% NMEffective tax rate 24.2% 120.5% 460.7% Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016The U.S. Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-partypayments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively. In addition, in 2017 we were subject to aone-time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax.Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we have made reasonable estimates of theeffects and recorded provisional amounts in our financial statements as of December 31, 2017. SAB 118 has provided guidance for companies that have notcompleted their accounting for the income tax effects of the Tax Act in the period of enactment, allowing for a measurement period of up to one year after theenactment date to finalize the recording of the related tax impacts. As of December 31, 2017, we have not completed our accounting for the tax effects of theenactment of the Tax Act, however, we have made a reasonable estimate of the effects on our deferred tax balances and in relation to the transition tax. Theremeasurement of our deferred tax balances to reflect the reduced federal rate resulted in net tax benefit of $26.0 million. In addition, we have estimated andrecorded tax expense of $5.2 million in our tax provision for the year ended December 31, 2017. 51 During the year ended December 31, 2017, we recorded $42.7 million in valuation allowance for federal capital loss carryforwards not expected to berealized before expiration. In addition, we recorded $5.3 million valuation allowance for federal credit carryforwards, and foreign and state NOLcarryforwards. During the year ended December 31, 2016, we released valuation allowance of $17.5 million related to federal credit carryforwards, andforeign and state NOL carryforwards to offset current year taxable income. In evaluating our ability to recover our deferred tax assets within the jurisdictionfrom which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, tax-planningstrategies, and results of recent operations. In evaluating the objective evidence that historical results provide, we consider three years of cumulativeoperating income (loss). Using all available evidence, we determined that it was uncertain that we will realize the deferred tax asset for certain of thesecarryforwards within the carryforward period.Our effective rate was lower for the year ended December 31, 2017 as compared with the prior year, primarily due to the recording of valuationallowance of $48 million in the current year, while release of valuation allowance of $17.5 million was recorded in the prior year.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015During the year ended December 31, 2016, we released valuation allowance of $17.5 million related to federal credit carryforwards, and foreign andstate NOL carryforwards to offset current year taxable income. During the year ended December 31, 2015, we recorded valuation allowances of $1.7 millionfor federal credit carryforwards, and foreign and state NOL carryforwards. In evaluating our ability to recover our deferred tax assets within the jurisdictionfrom which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, tax-planningstrategies, and results of recent operations. In evaluating the objective evidence that historical results provide, we consider three years of cumulativeoperating income (loss). Using all available evidence, we determined that it was uncertain that we will realize the deferred tax asset for certain of thesecarryforwards within the carryforward period.Our effective rate for the year ended December 31, 2016 was lower as compared with the prior year, primarily due to the release of valuation allowanceof $17.5 million, and the fact that permanent items and the impact of foreign earnings had a greater impact on the near break-even pre-tax income of $0.6million for the year ended December 31, 2015, compared to the impacts of these items on a pre-tax loss of $14.8 million for the year ended December 31,2016. Lastly, the effective tax rate for the year ended December 31, 2016, was impacted by the consolidation of Netsmart’s financial results starting on April19, 2016. On December 18, 2015, the Consolidated Appropriations Act of 2016 was enacted into law, which both reinstated retroactively to January 1, 2015the research and development credit and made it permanent. Our effective tax rate for the years ended December 31, 2016 and December 31, 2015 includesthe estimated impacts of this credit of $3.0 million. A detailed reconciliation of taxes computed at the statutory federal income tax rate of 35% and theprovision for income taxes is set forth in Note 7, “Income Taxes,” to our consolidated financial statements included in Part II, Item 8, “Financial Statementsand Supplementary Data” of this Form 10-K.Discontinued Operations 2017 % 2016 % Year Ended December 31, Change Change(In thousands) 2017 2016 2015 from 2016 from 2015Income from discontinued operations, net of tax $4,676 $- $- NM NMYear Ended December 31, 2017 Compared with the Years Ended December 31, 2016 and 2015The income from discontinued operations, net of tax, for the year ended December 31, 2017 represents the net earnings attributable to two solutionsacquired during 2017 as part of the EIS Business that we intend to discontinue. Refer to Note 13, “Discontinued Operations” to our consolidated financialstatements included in Part II, Item 8, “Financial Statements and Supplementary Data” of our Form 10-K for additional information regarding discontinuedoperations.Non-Controlling Interests 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Net loss (income) attributable to non-controlling interest $1,566 $(146) $(170) NM (14.1%)Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart $(43,850) $(28,536) $0 53.7% NMYear Ended December 31, 2017 Compared with the Years Ended December 31, 2016 and 2015The net loss (income) attributable to non-controlling interest represents the share of earnings of consolidated affiliates that is attributable to theaffiliates’ common stock that is not owned by us for each of the periods presented. The accretion of redemption 52 preference on redeemable convertible non-controlling interest represents the accretion of liquidation preference at 11% per annum to the value of thepreferred units of Netsmart for each of the periods presented. Refer to Note 2, “Business Combinations and Other Investments” to our consolidated financialstatements included in Part II, Item 8, “Financial Statements and Supplementary Data” of our Form 10-K for additional information regarding suchliquidation preference. Segment OperationsOverview of Segment Results 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue: Clinical and Financial Solutions $1,251,299 $1,125,617 $1,105,504 11.2% 1.8%Population Health 270,447 234,662 219,861 15.2% 6.7%Netsmart 319,074 173,361 0 84.1% NM Unallocated Amounts (22,485) 16,259 61,028 NM (73.4%)Discontinued Operations (11,993) 0 0 NM NM Total revenue $1,806,342 $1,549,899 $1,386,393 16.5% 11.8% Gross Profit: Clinical and Financial Solutions $532,152 $471,814 $452,058 12.8% 4.4%Population Health 190,394 171,404 147,095 11.1% 16.5%Netsmart 149,550 70,289 0 112.8% NM Unallocated Amounts (81,121) (42,468) (18,588) 91.0% 128.5%Discontinued Operations (8,814) 0 0 NM NM Total gross profit $782,161 $671,039 $580,565 16.6% 15.6% Income from operations: Clinical and Financial Solutions $285,552 $251,886 $234,146 13.4% 7.6%Population Health 131,174 111,956 91,887 17.2% 21.8%Netsmart 29,473 (7,412) 0 NM NM Unallocated Amounts (396,616) (296,659) (294,150) 33.7% 0.9%Discontinued Operations (7,666) 0 0 NM NM Total income (loss) from operations $41,917 $59,771 $31,883 (29.9%) 87.5%Clinical and Financial SolutionsOur Clinical and Financial Solutions segment derives its revenue from the sale of integrated clinical software applications and financial andinformation solutions, which primarily include EHR-related software, financial and practice management software, related installation, support andmaintenance, outsourcing, private cloud hosting, revenue cycle management, training and electronic claims administration services. 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue $1,251,299 $1,125,617 $1,105,504 11.2% 1.8%Gross profit $532,152 $471,814 $452,058 12.8% 4.4%Gross margin % 42.5% 41.9% 40.9% Income from operations $285,552 $251,886 $234,146 13.4% 7.6%Operating margin % 22.8% 22.4% 21.2% 53 Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Clinical and Financial Solutions revenue increased during the year ended December 31, 2017 compared with the prior year, as higher revenue fromsoftware delivery, support and maintenance and recurring revenue cycle management and other transaction-based services and private cloud hosting clientservices were partly offset by lower non-recurring client services revenue. This increase was primarily as a result of the acquisition of the EIS Businessesduring the fourth quarter of 2017, which contributed $97 million of revenue, including $19 million of revenue (excluding $7 million of acquisition-relateddeferred revenue adjustments) associated with discontinued operations. The remainder of the increase was driven by recurring revenue from highersubscription-based, revenue cycle management and other transaction-based services revenue, and higher recurring private cloud hosting client servicesrevenue. The increase in revenue cycle management and other transaction-based services revenue was due to the activation of several new accounts, whichmore than offset certain other projects that ended in 2016. Revenue related to private cloud hosting increased primarily due to several new large client go-lives. Non-recurring revenue decreased slightly compared with prior year, as higher software license sales of our acute solutions and related professionalservices revenue driven by a higher number of larger acute client expansions was more than offset by lower non-recurring revenue associated with ourambulatory solutions attributable to fewer large implementations of our ambulatory solutions as certain large service projects were mostly completed in2016. The decrease in non-recurring revenue was also partly due to lower client services revenue from the realization of certain deferred revenue amountsduring the first quarter of 2016 that did not re-occur in 2017.Gross profit and gross margin increased during the year ended December 31, 2017 compared with the prior primarily due to gross profit from the EISBusinesses, which also had higher average margins compared with our existing businesses included within the Clinical and Financial Solutionssegment. During 2017 we also recognized certain credits related to our hosting partners which did not occur during the prior year. These increases werepartially offset by a greater reliance on third-party products and services, higher internal costs related to anticipated new outsourcing clients go-lives andhigher amortization of capitalized software development and acquired technology-related intangible assets associated with our existing businesses.Income from operations also increased primarily driven by the same factors as above. The operating margin increased slightly as higher operatingmargin associated with the EIS Business was offset by an increase in selling, general and administrative expenses, primarily due to higher marketing andprofessional services expenses.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Clinical and Financial Solutions revenue increased during the year ended December 31, 2016 compared with the prior year, as higher revenue fromrecurring outsourcing, revenue cycle management and private cloud hosting client services, and higher non-recurring software delivery, support andmaintenance revenue, which were partly offset by lower non-recurring client services revenue. The higher revenue from recurring outsourcing and revenuecycle management client services was due to an increase in our client base for such services. This increase in revenue included additional revenue associatedwith expanding our outsourcing services at several large clients and adding new outsourcing clients as well as revenue related to our acquisition of a majorityinterest in a third party in April 2015. Revenue related to private cloud hosting also increased as we experienced increased demand for these services. Theincrease in non-recurring software delivery, support and maintenance revenue was primarily driven by higher software license sales of our acute solutions.The decrease in non-recurring revenue was the result of a decrease in implementation services attributable to fewer large implementations of our ambulatoryand acute solutions and several large software license sales of our acute solutions in the prior year period.The improvement in profitability during the year ended December 31, 2016 compared with the prior year was primarily driven by our various clientservices revenue streams. The year ended December 31, 2016 reflects the full effect of cost reduction initiatives completed during the first half of 2015, whichresulted in both lower overall third-party resources utilization and internal costs associated with the delivery of client services compared with the year endedDecember 31, 2015. Additionally, we capitalized a higher amount of software development costs during the year ended December 31, 2016 compared withthe year ended December 31, 2015. 54 Population HealthOur Population Health segment derives its revenue from the sale of health management and coordinated care solutions, which are mainly targeted athospitals, health systems, other care facilities and Accountable Care Organizations (“ACOs”). These solutions enable clients to connect, transition, analyzeand coordinate care across the entire care community. 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue $270,447 $234,662 $219,861 15.2% 6.7%Gross profit $190,394 $171,404 $147,095 11.1% 16.5%Gross margin % 70.4% 73.0% 66.9% Income from operations $131,174 $111,956 $91,887 17.2% 21.8%Operating margin % 48.5% 47.7% 41.8% Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Population Health revenue increased during the year ended December 31, 2017 compared with the prior year comparable period, primarily as a resultof the acquisition of the EIS Business during the fourth quarter of 2017, which contributed $26 million of revenue. The remainder of the increase wasprimarily due to higher non-recurring software delivery, support and maintenance revenue associated with client expansion and new client sales of ourCareInMotion™ population health management portfolio and related non-recurring project-related client services revenue. These increases were partly offsetby lower recurring software delivery, support and maintenance revenue, mostly driven by the realization of certain deferred revenue amounts upon deliveryof all software-related elements associated with a large customer contract during the third quarter of 2016, which did not recur in 2017.Gross margin decreased primarily due to an unfavorable mix of lower margin projects utilizing third party resources in addition to slightly higherthird-party expenses associated with new solutions and higher amortization of capitalized software development and acquired technology-related intangibleassets. Income from operations and operating margin increased primarily due to an overall decline in operating expenses, including higher capitalization ofinternal software development expenses.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Population Health revenue increased during the year ended December 31, 2016 compared with the prior year in part due to higher recurringsubscription-based revenue associated with our CareInMotion™ population health management portfolio. This increase was slightly offset by lower revenuefrom non-recurring client services.Gross profit and gross margin increased during the year ended December 31, 2016 compared with the prior year, primarily due to a combination ofhigher recurring subscription-based revenue and lower overall internal costs associated with this revenue stream, as a result of headcount reductions madeduring the first half of 2015. Income from operations and operating margin also increased during the year ended December 31, 2016 compared with the prioryear, primarily due to the same factors, as selling, general and administrative expenses were only slightly higher.NetsmartOur Netsmart segment was established as part of the Netsmart Transaction and was initially comprised of the combination of our HomecareTM businesswith Netsmart, Inc. The Netsmart segment also includes the results of HealthMEDX, LLC and DeVero, Inc., which were acquired subsequent to the NetsmartTransaction. Refer to Note 2, “Business Combinations and Other Investments” for further details regarding the acquisition of these businesses. The Netsmartsegment operates in and provides software and technology solutions to the health and human services and post-acute sectors of health care throughout theUnited States. The health and human services sector comprises behavioral health, addiction treatment, intellectual and developmental disability services,child and family services and public health market segments. The post-acute sector includes homecare and long-term care, which is comprised of homehealth, hospice, private duty, assisted living and skilled nursing. The human services, home care and long-term care markets combined represent the secondlargest category of health care spending in the United States. 55 2017 % 2016 % Year Ended December 31, Change Change(In thousands) 2017 2016 2015 from 2016 from 2015Revenue $319,074 $173,361 $0 84.1% NMGross profit $149,550 $70,289 $0 112.8% NMGross margin % 46.9% 40.5% NM Income (loss) from operations $29,473 $(7,412) $0 NM NMOperating margin % 9.2% (4.3%) NM Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Revenue includes two revenue categories, business services and system sales. Business services includes both subscription revenue and services andsupport revenue. System sales includes revenue from software licenses, sold either as perpetual licenses or fixed-term licenses, and revenue from third partysoftware licenses and hardware products.Revenue for the year ended December 31, 2017 increased compared with the prior year, primarily due to sales to both existing clients as well as newfootprints and incremental revenue from the acquisitions of HealthMEDX during the fourth quarter of 2016 and DeVero during the third quarter of 2017. Inaddition, total revenue for the years ended December 31, 2017 and 2016 was reduced by $5 million and $25 million, respectively, due to the impact ofacquisition-related deferred revenue adjustments related to the Netsmart Transaction. In addition, revenue for the year ended December 31, 2017 increaseddue to the 2016 comparable period only including results of Netsmart since the date of the Netsmart Transaction in April 2016. Furthermore, the results ofthe HomecareTM business are included in the Netsmart reportable segment in the current year period and for a portion of the 2016 period and in theUnallocated Amounts category for the 2016 period prior to the date of the contribution of the Homecare business. Gross profit and gross margin improved during the year ended December 31, 2017, primarily driven by higher revenue and operational efficiencies aswell as the impact of lower acquisition-related deferred revenue adjustments in 2017 compared with 2016, partially offset by an increase in amortization ofsoftware development and acquisition-related intangible assets totaling $46 million in 2017 as compared with $27 million in 2016. Income from operationsand operating margin improved as a result of the above revenue increases and gross margin improvements partly offset by increased expenses related to theacquired businesses.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Revenue for the year ended December 31, 2016 includes two revenue categories, business services and system sales. Business services includes bothsubscription revenue and services and support revenue. System sales includes revenue from software licenses, sold either as perpetual licenses or fixed-termlicenses, and revenue from third party software licenses and hardware products. Overall, revenues are negatively impacted by the deferred revenue adjustmentrelated to the Netsmart Transaction totaling $25 million for the year ended December 31, 2016. Gross profit and loss from operation was also negativelyimpacted by this same deferred revenue adjustment in addition to the amortization of acquisition-related intangibles acquired in the Netsmart Transactionand capitalized software development totaling $27 million for the year ended December 31, 2016. 56 Unallocated AmountsIn determining revenue, gross profit and income from operations for our segments, with the exception of the Netsmart segment, we do not include inrevenue the amortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in abusiness acquisition. With the exception of the Netsmart segment, we also exclude the amortization of intangible assets, stock-based compensation, non-recurring expenses and transaction-related costs, and non-cash asset impairment charges from the operating segment data provided to our CODM. Non-recurring expenses relate to certain severance, product consolidation, legal, consulting and other charges incurred in connection with activities that areconsidered one-time. Accordingly, these amounts are not included in our reportable segment results and are included in the “Unallocated Amounts” category.The “Unallocated Amounts” category also includes corporate general and administrative expenses (including marketing expenses) which are centrallymanaged, as well as revenue and the associated cost from the resale of certain ancillary products, primarily hardware, other than the respective amountsassociated with the Netsmart segment. The historical results of our HomecareTM business prior to the Netsmart Transaction are also included in the“Unallocated Amounts” category. The Netsmart segment, as presented, includes all revenue and expenses incurred by Netsmart since it operates as a stand-alone business entity and its resources allocation and performance are reviewed and measured at such all-inclusive level. The eliminations of intercompanytransactions between Allscripts and Netsmart are also included in the “Unallocated Amounts” category. 2017 % 2016 % Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Revenue $(22,485) $16,259 $61,028 NM (73.4%)Gross profit $(81,121) $(42,468) $(18,588) 91.0% 128.5%Gross margin % NM NM (30.5%) Income (loss) from operations $(396,616) $(296,659) $(294,150) 33.7% 0.9%Operating margin % NM NM NM Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Revenue from the resale of ancillary products, primarily consisting of hardware, is customer and project driven and, as a result, can fluctuate fromperiod to period. Revenue for the year ended December 31, 2017 compared with the prior year decreased primarily due to the recognition of $37 million ofamortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in the EIS Businessand NantHealth provider/patient engagement acquisitions. Additionally, the results of our HomecareTM business are included in the Netsmart reportablesegment for the year ended December 31, 2017 and in the Unallocated Amounts category for part of the year ended December 31, 2016 prior to the NetsmartTransaction. Revenue for both the year ended December 31, 2017 and 2016 includes the elimination of $10 million of revenue associated with transactionsbetween Allscripts and Netsmart. Hardware revenue for the year ended December 31, 2017 was slightly lower compared with prior year.Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $374 million for the yearended December 31, 2017 compared to $313 million for the year ended December 31, 2016. This increase was primarily driven by increases in selling,general and administrative expenses of $52 million and research and development expenses of $14 million, partially offset by a decrease in asset impairmentcharges of $5 million. The increases selling, general and administrative expenses and research and development expenses were primarily due to highertransaction-related, severance and legal expenses, and additional expenses mostly related to the acquisition of the EIS Business during the fourth quarter of2017.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Revenue from the resale of ancillary products, primarily consisting of hardware, is customer and project driven and, as a result, can fluctuate fromperiod to period. Revenue for the year ended December 31, 2016 includes the elimination of $10 million of revenue associated with transactions betweenAllscripts and Netsmart since the Netsmart Transaction on April 19, 2016. Revenue for the year ended December 31, 2016 decreased primarily due to theresults of our HomecareTM business being included in the prior year period in their entirety but only partially in the current year period, as HomecareTMresults are included as part of the Netsmart reportable segment.Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $313 million for the yearended December 31, 2016 compared to $355 million for the year ended December 31, 2015. This decline was primarily the result of decreases in both cost ofrevenue and operating expenses. Cost of revenue decreased $21 million largely due to the results of our HomecareTM business being included in the prioryear period in their entirety and only partially in the current year period. Selling, general and administrative expenses decreased $11 million primarily due tohigher legal fees and severance costs associated with headcount reductions taken in 2015. The remaining decrease was primarily driven by loweramortization of software development and acquisition-related assets due to several intangible assets becoming fully amortized during the first half of 2015. 57 Contract BacklogContract backlog represents the value of bookings and support and maintenance contracts that have not yet been recognized as revenue. A summaryof contract backlog by revenue category is as follows: As of December 31, (In millions) 2017 2016 % Change Software delivery, support and maintenance $2,748 $2,379 15.5%Client services 1,899 1,671 13.6%Total contract backlog $4,647 $4,050 14.7% Total contract backlog as of December 31, 2017 was higher compared with December 31, 2016, primarily due to an increase in bookings related tosubscription-based agreements and managed services, such as outsourcing and revenue cycle management. The revenue associated with these types ofagreements and contracts is recognized over an extended period of time based on the subscription term or contract period. Total contract backlog as ofDecember 31, 2017 also includes the addition of backlog from EIS starting in the fourth quarter of 2017. Total contract backlog can fluctuate betweenperiods based on the level of revenue and bookings as well as the timing of renewal activity and periodic revalidations. We estimate that approximately 38%of our aggregate contract backlog as of December 31, 2017 will be recognized as revenue during 2018. We estimate that the aggregate contract backlog as of December 31, 2017 will be recognized as revenue in future years as follows: Year Ended December 31, (Percentage ofTotal Backlog) 2018 38%2019 22%2020 13%2021 10%2022 6%Thereafter 11%Total 100% Liquidity and Capital ResourcesThe primary factors that influence our liquidity include, but are not limited to, the amount and timing of our revenues, cash collections from ourclients, capital expenditures and investments in research and development efforts, including investments in or acquisitions of third-parties. As ofDecember 31, 2017, our principal sources of liquidity consisted of cash and cash equivalents of $162 million and available borrowing capacity of $139million under our Revolving Facility and $50 million under the Netsmart Revolving Facility. The change in our cash and cash equivalents balance isreflective of the following:Operating Cash Flow Activities 2017 $ 2016 $ Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Net (loss) income $(154,175) $3,030 $(2,056) $(157,205) $5,086 Non-cash adjustments to net loss 369,993 211,586 197,287 158,407 14,299 Cash impact of changes in operating assets and liabilities 63,597 54,388 16,348 9,209 38,040 Net cash provided by operating activities $279,415 $269,004 $211,579 $10,411 $57,425Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash provided by operating activities increased by $10 million during the year ended December 31, 2017 compared with the prior year, primarilydue to the timing of annual maintenance billings associated with our recent acquisition of the EIS Business, which typically occur during the fourth quarterfor that business. This additional cash flow more than offset higher interest expenses paid attributable to Netsmart’s non-recourse debt and higher transaction-related and legal expenses. The increase in non-cash adjustments to net loss was primarily driven by other-than-temporary impairment charges associatedwith long-term investments. 58 Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Net cash provided by operating activities increased during the year ended December 31, 2016 compared with the prior year. This increase reflects thebeneficial impact of our continued efforts to streamline our organizational structure, cut long-term costs, reduce discretionary spending and improveefficiency. In addition, improved working capital management generated a $38 million increase in cash flows from operating activities during the year endedDecember 31, 2016 as compared with the prior year comparable period.Investing Cash Flow Activities 2017 $ 2016 $ Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Capital expenditures $(46,376) $(35,510) $(18,322) $(10,866) $(17,188)Capitalized software (138,895) (102,472) (49,264) (36,423) (53,208)Cash paid for business acquisitions, net of cash acquired (222,310) (994,876) (9,372) 772,566 (985,504)Purchases of equity securities, other investments and related intangible assets (5,606) (21,185) (215,786) 15,579 194,601 Other proceeds from investing activities 215 37 3,778 178 (3,741)Net cash used in investing activities $(412,972) $(1,154,006) $(288,966) $741,034 $(865,040)Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash used in investing activities decreased during the year ended December 31, 2017 compared with the prior year, primarily due to higheramounts spent during the year ended December 31, 2016 related to business acquisitions and other investments. During 2017, we completed the acquisitionsof the EIS Business from the McKesson Corporation and the provider and patient engagement solutions business from NantHealth, Inc., and Netsmart Inc.completed the acquisition of DeVero, for total cash payments of $222 million, net of cash acquired. During the year ended December 31, 2017, we alsoacquired $3 million in equity investments in third parties and a $3 million convertible note issued by another entity in which we also hold an equityinvestment. In comparison, during 2016, we completed the acquisitions of Netsmart, Inc., Netsmart Inc.’s acquisition of HealthMEDX and the acquisition ofcontrolling stakes in three third parties, for a total of $995 million, net of cash acquired. During 2016, we also invested $21 million of new third-partyinvestments. Spending for capital expenditures and capitalized software costs increased during the year ended December 31, 2017 compared with the prioryear comparable period primarily due to the payment of $24 million for third-party software purchases to supplement our internal software developmentefforts, which was accrued as of December 31, 2016, and additional costs associated with Netsmart and the EIS Business.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Net cash used in investing activities increased during the year ended December 31, 2016 compared with the prior year, primarily due to acquisitionand investment transactions completed during 2016. In particular, such transactions included: (i) the acquisition of Netsmart, Inc. for $906 million, net ofcash acquired, (ii) Netsmart Inc.’s acquisition of HealthMEDX for $36 million, net of cash acquired, (iii) the acquisition of controlling stakes in three thirdparties for $53 million, net of cash acquired, and (iv) $21 million of new third-party investments. Spending for capital expenditures and capitalized softwarecosts in 2016 increased by $70 million compared with 2015. 59 Financing Cash Flow Activities 2017 $ 2016 $ Year Ended December 31, Change Change (In thousands) 2017 2016 2015 from 2016 from 2015 Proceeds from sale or issuance of common stock $1,568 $84 $103,631 $1,484 $(103,547)Proceeds from issuance of redeemable convertible preferred stock - Netsmart 0 $333,605 $- (333,605) 333,605 Excess tax benefits from stock-based compensation 0 1,014 644 (1,014) 370 Taxes paid related to net share settlement of equity awards (7,269) (8,204) (7,062) 935 (1,142)Payments on debt instruments (154,951) (163,522) (239,109) 8,571 75,587 Credit facility borrowings, net of issuance costs 374,698 823,535 284,161 (448,837) 539,374 Repurchase of common stock (12,077) (121,241) 0 109,164 (121,241)Payment of acquisition financing obligations (4,878) 0 0 (4,878) 0 Proceeds from sales of subsidiary shares to non-controlling interest 1,494 0 0 1,494 0 Net cash provided by financing activities $198,585 $865,271 $142,265 $(666,686) $723,006Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash provided by investing activities decreased during the year ended December 31, 2017 compared with the prior year, primarily due to lowercredit facility borrowings and proceeds from the issuance of stock. During 2017, we borrowed $170 million under our revolving credit facility to finance theacquisition of the EIS Business and Netsmart borrowed an additional $51 million under its senior secured term loan to finance its acquisition of DeVero, Inc.In comparison, during 2016, borrowings totaled $824 million and were used to complete the Netsmart and other acquisitions, and partially finance third-party investments. Additionally, we repurchased a smaller amount of common stock during the year ended December 31, 2017 compared with the prior year.Year Ended December 31, 2016 Compared with the Year Ended December 31, 2015Net cash provided by financing activities increased during the year ended December 31, 2016 compared with the prior year, primarily due to $574million, net of issuance costs, borrowed under the Netsmart Credit Agreements and $250 million borrowed under our Revolving Facility to partially financeacquisitions and third-party investments. In addition, Netsmart received $334 million in proceeds from the issuance of redeemable convertible preferred stockduring the second quarter of 2016. During 2016, we also repurchased $121 million of our common stock. During the year ended December 31, 2015, weborrowed $100 million under our Revolving Facility to partially finance our $200 million investment in NantHealth and received $100 million in proceedsfrom the sale of our common stock and warrants to Nant Capital LLC. 60 Future Capital RequirementsThe following table summarizes future payments under our 1.25% Notes and Senior Secured Credit Facility and under Netsmart’s Non-Recourse Debtas of December 31, 2017: (In thousands) Total 2018 2019 2020 2021 2022 Thereafter Principal payments: 1.25% Cash Convertible Senior Notes (1) $345,000 $0 $0 $345,000 $0 $0 $0 Senior Secured Credit Facility (2) 628,750 28,125 40,625 560,000 0 0 0 Netsmart Non-Recourse Debt (2) First Lien Term Loan 479,316 4,866 4,866 4,866 4,866 4,866 454,986 Second Lien Term Loan 167,000 0 0 0 0 0 167,000 Total principal payments 1,620,066 32,991 45,491 909,866 4,866 4,866 621,986 Interest payments: 1.25% Cash Convertible Senior Notes (1) 12,939 4,313 4,313 4,313 0 0 0 Senior Secured Credit Facility (2) (3) 57,846 24,141 22,888 10,817 0 0 0 Netsmart Non-Recourse Debt First Lien Term Loan (4) 158,912 29,571 29,270 28,969 28,667 28,366 14,069 First Lien Revolver (5) 875 250 250 250 125 0 0 Second Lien Term Loan (6) 110,008 18,335 18,335 18,335 18,335 18,335 18,333 Total interest payments 340,580 76,610 75,056 62,684 47,127 46,701 32,402 Total future debt payments $1,960,646 $109,601 $120,547 $972,550 $51,993 $51,567 $654,388 (1)Assumes no cash conversions of the 1.25% Notes prior to their maturity on July 1, 2020. (2)Assumes no additional borrowings after December 31, 2017 and that all drawn amounts are repaid upon maturity. (3)Assumes LIBOR plus the applicable margin remain constant at the rate in effect on December 31, 2017, which was 3.82%. (4)Assumes Adjusted LIBO Rate plus the applicable margin remain constant at the rate in effect on December 31, 2017, which was 6.19%. (5)Assumes commitment fee remain constant at the rate in effect on December 31, 2017, which was 0.5%. (6)Assumes Adjusted LIBO Rate plus the applicable margin remain constant at the rate in effect on December 31, 2017, which was 10.98%.Revolving Credit FacilitiesWe have a $550 million senior secured revolving facility (the “Revolving Facility”) that expires in September 2020. A total of up to $50 million ofthe Revolving Facility is available for the issuance of letters of credit, up to $10 million of the Revolving Facility is available for swingline loans, and up to$100 million of the Revolving Facility could be borrowed under certain foreign currencies. We had $410.0 million of borrowings and $0.8 million of lettersof credit outstanding under the Revolving Facility as of December 31, 2017. We had $139.2 million available, net of outstanding letters of credit, under theRevolving Facility as of December 31, 2017. There can be no assurance that we will be able to draw on the full available balance of the Revolving Facility ifthe financial institutions that have extended such credit commitments become unwilling or unable to fund such borrowings.Subsequent to December 31, 2017, we amended and restated our Senior Secured Credit Facility on February 15, 2018. The Second Amended andRestated Credit Agreement provides for a $400 million senior secured term loan and a $900 million senior secured revolving facility, which representincreases from the $250 million term loan and $550 million revolving facility provided under our existing 2015 Credit Agreement, respectively, each with afive-year term.Netsmart has a $50 million senior secured 5-year revolving loan credit facility (the “Netsmart Revolving Facility”) that expires in April 2023.Netsmart had no borrowings outstanding under the Netsmart Revolving Facility as of December 31, 2017. Netsmart had $50.0 million available borrowingcapacity, net of outstanding letters of credit, under the Netsmart Revolving Facility as of December 31, 2017. There can be no assurance that Netsmart will beable to draw on the full available balance of the Netsmart Revolving Facility if the financial institutions that have extended such credit commitments becomeunwilling or unable to fund such borrowings.Refer to Note 6, “Debt,” and Note 19, “Subsequent Events,” to our consolidated financial statements included in Part II, Item 8, “Financial Statementsand Supplementary Data” of this Form 10-K for further information. 61 Other Matters Affecting Future Capital RequirementsOn November 17, 2016, we announced that our Board approved a new stock purchase program under which we may repurchase up to $200 million ofour common stock through December 31, 2019. During 2017, we purchased 1.0 million shares of our common stock under the new program for a total of$12.1 million. No shares were repurchased during the fourth quarter of 2017. Any share repurchase transactions may be made through open markettransactions, block trades, privately negotiated transactions (including accelerated share repurchase transactions) or other means, subject to our workingcapital needs, cash requirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of ourcommon stock, and other factors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at anytime.During 2017, we completed renegotiations with Atos and our other largest hosting partners to improve the operating cost structure of our private cloudhosting operations. As a result of these renegotiations, we signed a new restated and amended agreement with Atos and, therefore, starting in 2018, we willbegin to transition substantially all of our hosting services to Atos. The increased scale of the relationship is expected to result in future reductions in thebase fees and volume fee rates. Refer to schedule included within the “Contractual Obligations, Commitments and Off Balance Sheet Arrangements” sectionof the Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein for further detail.We are currently in the seventh year of a ten-year agreement with Atos (formerly known as Xerox Consultant Services) to provide services to supportour private cloud hosting services for our Sunrise acute care clients. We maintain all client relationships and domain expertise with respect to the hostedapplications. The new amended and restated agreement extends the term to 2023 with annual auto-renewal periods for an additional two years thereafter. Thenew agreement also provides for the payment of initial annual base fees of $30 million per year (decreasing to $25 million by the end of the agreement) pluscharges for volume-based services currently projected using volumes estimated based on historical actuals and forecasted projections. During the year endedDecember 31, 2017, we incurred $59 million of expenses under our existing agreement with Atos, which are included in cost of revenue in our consolidatedstatements of operations.Our total investment in research and development efforts during 2017 increased compared with 2016 primarily due to the consolidation of Netsmartbeginning in the second quarter of 2016, including the impact of Netsmart’s subsequent acquisitions of HealthMEDX and DeVero, and the acquisition of theEIS Business in the fourth quarter of 2017. In addition, we continue to build and expand our capabilities in emerging areas of health care, such as precisionmedicine and population health analytics, and our traditional offerings in the ambulatory, acute and post-acute markets. Our total spending consists ofresearch and development costs directly recorded to expense, which are offset by the capitalization of eligible development costs, and the purchase of third-party software, as needed, to supplement our internal development efforts. To supplement our statement of operations, the table below presents a non-GAAPmeasure of research and development-related expenses that we believe is a useful metric for evaluating how we are investing in research and development. Year Ended December 31, (In thousands) 2017 2016 2015 Research and development costs directly recorded to expense $220,219 $187,906 $184,791 Capitalized software development costs per consolidated statement of cash flows (1) 138,895 102,472 49,264 Total non-GAAP R&D-related spending $359,114 $290,378 $234,055 Total revenue $1,806,342 $1,549,899 $1,386,393 Total non-GAAP R&D-related spending as a % of total revenue 20% 19% 17%• (1)Amount for the years ended December 31, 2017 and 2016 include $24 million and $20 million, respectively, of third-party software purchases tosupplement our internal software development efforts.We believe that our cash and cash equivalents of $162 million as of December 31, 2017, our future cash flows, and our borrowing capacity under ourRevolving Facility and Netsmart’s Revolving Facility, taken together, provide adequate resources to fund ongoing cash requirements for the next twelvemonths. We cannot provide assurance that our actual cash requirements will not be greater than we expect as of the date of this Form 10-K. We will, from timeto time, consider the acquisition of, or investment in, complementary businesses, products, services and technologies, and the purchase of our common stockunder our stock repurchase program, each of which might impact our liquidity requirements or cause us to borrow under our credit facilities or issueadditional equity or debt securities.If sources of liquidity are not available or if we cannot generate sufficient cash flow from operations during the next twelve months, we might berequired to obtain additional sources of funds through additional operating improvements, capital market transactions, asset sales or financing from thirdparties, a combination thereof or otherwise. We cannot provide assurance that these additional sources of funds will be available or, if available, would havereasonable terms. 62 Contractual Obligations, Commitments and Off Balance Sheet ArrangementsWe enter into obligations with third parties in the ordinary course of business. The following table summarizes our significant contractual obligationsas of December 31, 2017 and the effect such obligations are expected to have on our liquidity and cash in future periods, assuming all obligations reachmaturity. We do not believe that our cash flow requirements can be assessed based upon this analysis of these obligations as the funding of these future cashobligations will be from future cash flows from the sale of our products and services that are not reflected in the following table. Payments due by period (In thousands) Total 2018 2019 2020 2021 2022 Thereafter Balance sheet obligations: (1) Debt: Principal payments $973,750 $28,125 $40,625 $905,000 $0 $0 $0 Interest payments 70,785 28,454 27,201 15,130 0 0 0 Netsmart Non-Recourse Debt: Principal payments 646,316 4,866 4,866 4,866 4,866 4,866 621,986 Interest payments 269,795 48,156 47,855 47,554 47,127 46,701 32,402 Other debt 0 0 0 0 0 0 0 Capital leases 18,485 11,148 5,976 1,203 158 0 0 Other obligations: (2) Non-cancelable operating leases 143,228 28,534 25,297 22,195 18,008 13,955 35,239 Purchase obligations (3) 152,678 65,187 42,169 22,892 12,914 9,516 0 Agreement with Atos 601,288 78,671 91,617 88,228 82,056 79,055 181,661 Other contractual obligations (4) 3,715 2,456 1,259 0 0 0 0 Total contractual obligations $2,880,040 $295,597 $286,865 $1,107,068 $165,129 $154,093 $871,288 (1)Our liability for uncertain tax positions was $12 million as of December 31, 2017. Liabilities that may result from this exposure have been excludedfrom the table above since we cannot predict, with reasonable reliability, the outcome of discussions with the respective taxing jurisdictions, whichmay or may not result in cash settlements. We have also excluded net deferred tax liabilities of $89 million from the amounts presented in the table asthe amounts that will be settled in cash are not known and the timing of any payments is uncertain.(2)We have no off balance sheet arrangements as defined in Item 303 of Regulation S-K as of December 31, 2017. Additionally, we have obligations topay contingent consideration associated with acquisitions completed in 2016 and 2017 of $1.8 million in 2018 and $0.6 million in 2019. Suchcontingent consideration obligations are excluded from the above table since their payment is based on future financial objectives, the achievementof which we cannot predict.(3)Purchase obligations consist of minimum purchase commitments for telecommunication services, computer equipment, maintenance, consulting andother commitments.(4)Other contractual obligations consist of $0.8 million of letters of credit outstanding under our 2015 Credit Agreement and $2.9 million relating todeferred consideration payable for acquisitions which are solely contingent on the passage of time. As of December 31, 2017, no amounts had beendrawn on the letters of credit. 63 Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are exposed to interest rate risk, primarily changes in United States interest rates and changes in LIBOR, and primarily due to our borrowing underthe Senior Secured Credit Facility. Based on our balance of $629 million of debt under the Senior Secured Credit Facility as of December 31, 2017, anincrease in interest rates of 1.0% would cause a corresponding increase in annual interest expense of approximately $6 million. Borrowings under Netsmart’sCredit Agreements are also exposed to interest rate risk as the interest rates on such borrowings are variable, which exposes us to fluctuations in our results ofoperations or liquidity, an increase in interest rates of 1.0% would cause a corresponding additional increase in annual interest expense of approximately $6million. Netsmart’s borrowings are non-recourse in nature to Allscripts.We have global operations; therefore, we are exposed to risks related to foreign currency fluctuations. Foreign currency fluctuations throughDecember 31, 2017 have not had a material impact on our financial position or operating results. We believe most of our global operations are naturallyhedged for foreign currency risk as our foreign subsidiaries invoice their clients and satisfy their obligations primarily in their local currencies. An exceptionto this is our development center in India, where we are required to make payments in local currency but which we fund in United States dollars. Starting in2015, we entered into non-deliverable forward foreign currency exchange contracts with reputable banking counterparties in order to hedge a portion of ourforecasted future Indian Rupee-denominated (“INR”) expenses against foreign currency fluctuations between the United States dollar and the INR. As ofDecember 31, 2017, there were six forward contracts outstanding that were staggered to mature monthly starting in January 2018 and ending in June 2018. Inthe future, we may enter into additional forward contracts to increase the amount of hedged monthly INR expenses or initiate hedges for monthly periodsbeyond June 2018. As of December 31, 2017, the notional amount of each outstanding monthly forward contract was 120 million INR, or the equivalent of$1.9 million United States dollars, based on the exchange rate between the United States dollar and the INR in effect as of December 31, 2017. These amountsalso approximate the ranges of forecasted future INR expenses we target to hedge in any one month in the future. The forward contracts resulted in gains of$2.7 million and $0.5 million during the years ended December 31, 2017 and 2016, respectively.We continually monitor our exposure to foreign currency fluctuations and may use additional derivative financial instruments and hedgingtransactions in the future if, in our judgment, circumstances warrant. There can be no guarantee that the impact of foreign currency fluctuations in the futurewill not be significant and will not have a material impact on our financial position or results of operations. 64 Item 8. Financial Statements and Supplementary DataREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersAllscripts Healthcare Solutions, Inc.Opinion on the financial statementsWe have audited the accompanying consolidated balance sheets of Allscripts Healthcare Solutions, Inc. (a Delaware corporation) and subsidiaries(the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss, changes in shareholders’equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules (collectively referred to as the“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity withaccounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), theCompany’s internal control over financial reporting as of December 31, 2017 based on criteria established in the 2013 Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 23, 2018 expressedan unqualified opinion.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to theCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and thePCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond tothose risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits alsoincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that our audits provide a reasonable basis for our opinion./s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2014 Raleigh, North CarolinaFebruary 23, 2018. 65 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersAllscripts Healthcare Solutions, Inc.Opinion on internal control over financial reportingWe have audited the internal control over financial reporting of Allscripts Healthcare Solutions, Inc. (a Delaware corporation) and subsidiaries (the“Company”) as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued byCOSO.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), theconsolidated financial statements of the Company as of and for the year ended December 31, 2017, and our report dated February 23, 2018 expressed anunqualified opinion on those financial statements.Basis for opinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting(“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are apublic accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtainingan understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinion.Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting ofPF2 EIS LLC and PF2 Enterprise Information Solutions Canada ULC (“Enterprise Information Solutions”), wholly-owned subsidiaries, whose financialstatements reflect total assets and revenues constituting eight and five percent, respectively, of the related consolidated financial statement amounts as of andfor the year ended December 31, 2017. As indicated in Management’s Report, Enterprise Information Solutions was acquired during 2017. Management’sassertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of EnterpriseInformation Solutions.Definition and limitations of internal control over financial reportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate./s/ GRANT THORNTON LLPRaleigh, North CarolinaFebruary 23, 2018 66 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, 2017 December 31, 2016 ASSETS Current assets: Cash and cash equivalents $155,839 $95,607 Restricted cash 6,659 1,003 Accounts receivable, net of allowance of $37,735 and $32,670 as of December 31, 2017 and December 31, 2016, respectively 567,873 405,172 Prepaid expenses and other current assets 115,463 102,551 Total current assets 845,834 604,333 Available for sale marketable securities 0 149,100 Fixed assets, net 165,603 148,810 Software development costs, net 222,189 163,879 Intangible assets, net 826,872 741,403 Goodwill 2,004,953 1,924,052 Deferred taxes, net 4,574 2,791 Other assets 148,849 97,791 Assets attributable to discontinued operations 11,276 0 Total assets $4,230,150 $3,832,159 67 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED BALANCE SHEETS (CONTINUED) (In thousands, except per share amounts) December 31, 2017 December 31, 2016 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $97,583 $126,144 Accrued expenses 85,915 86,135 Accrued compensation and benefits 99,632 64,291 Deferred revenue 546,830 363,772 Current maturities of long-term debt 27,687 15,158 Current maturities of non-recourse long-term debt - Netsmart 2,755 2,451 Current maturities of capital lease obligations 7,865 9,126 Total current liabilities 868,267 667,077 Long-term debt 906,725 717,853 Non-recourse long-term debt - Netsmart 625,193 576,918 Long-term capital lease obligations 7,105 9,877 Deferred revenue 24,047 18,009 Deferred taxes, net 93,643 141,752 Other liabilities 92,205 39,787 Liabilities attributable to discontinued operations 21,358 0 Total liabilities 2,638,543 2,171,273 Redeemable convertible non-controlling interest - Netsmart 431,535 387,685 Commitments and contingencies Stockholders’ equity: Preferred stock: $0.01 par value, 1,000 shares authorized, no shares issued and outstanding as of December 31, 2017 and December 31, 2016 0 0 Common stock: $0.01 par value, 349,000 shares authorized as of December 31, 2017 and December 31, 2016; 269,335 and 180,832 shares issued and outstanding as of December 31, 2017, respectively; 267,997 and 180,510 shares issued and outstanding as of December 31, 2016, respectively 2,693 2,680 Treasury stock: at cost, 88,504 and 87,487 shares as of December 31, 2017 and December 31, 2016, respectively (322,735) (310,993)Additional paid-in capital 1,781,059 1,789,959 Accumulated deficit (338,150) (187,351)Accumulated other comprehensive loss (1,985) (61,829)Total Allscripts Healthcare Solutions, Inc.'s stockholders' equity 1,120,882 1,232,466 Non-controlling interest 39,190 40,735 Total stockholders’ equity 1,160,072 1,273,201 Total liabilities and stockholders’ equity $4,230,150 $3,832,159 The accompanying notes are an integral part of these consolidated financial statements. 68 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In thousands, except per share amounts) 2017 2016 2015 Revenue: Software delivery, support and maintenance $1,174,722 $1,012,352 $918,430 Client services 631,620 537,547 467,963 Total revenue 1,806,342 1,549,899 1,386,393 Cost of revenue: Software delivery, support and maintenance 368,192 331,055 291,804 Client services 541,388 459,174 432,038 Amortization of software development and acquisition-related assets 114,601 88,631 81,986 Total cost of revenue 1,024,181 878,860 805,828 Gross profit 782,161 671,039 580,565 Selling, general and administrative expenses 486,271 392,865 339,175 Research and development 220,219 187,906 184,791 Asset impairment charges 0 4,650 1,544 Amortization of intangible and acquisition-related assets 33,754 25,847 23,172 Income from operations 41,917 59,771 31,883 Interest expense (87,479) (68,141) (31,396)Other income, net 413 1,087 2,183 Impairment of and losses on long-term investments (165,290) 0 0 Equity in net income (loss) of unconsolidated investments 821 (7,501) (2,100)(Loss) income from continuing operations before income taxes (209,618) (14,784) 570 Income tax benefit (provision) 50,767 17,814 (2,626)(Loss) income from continuing operations, net of tax (158,851) 3,030 (2,056)Income from discontinued operations, net of tax 4,676 0 0 Net (loss) income (154,175) 3,030 (2,056)Less: Net loss (income) attributable to non-controlling interests 1,566 (146) (170)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart (43,850) (28,536) 0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders $(196,459) $(25,652) $(2,226) Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share: Basic Continuing operations $(1.12) $(0.14) $(0.01)Discontinued operations $0.03 $0.00 $0.00 Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $(1.09) $(0.14) $(0.01) Diluted Continuing operations $(1.12) $(0.14) $(0.01)Discontinued operations $0.03 $0.00 $0.00 Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $(1.09) $(0.14) $(0.01) The accompanying notes are an integral part of these consolidated financial statements. 69 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Year Ended December 31, (In thousands) 2017 2016 2015 Net (loss) income $(154,175) $3,030 $(2,056)Other comprehensive income (loss): Foreign currency translation adjustments 3,352 (1,528) $(2,381)Change in unrealized gain (loss) on available for sale securities 56,359 (56,359) (228)Change in fair value of derivatives qualifying as cash flow hedges 114 597 424 Other comprehensive income (loss) before income tax benefit (expense) 59,825 (57,290) (2,185)Income tax benefit (expense) related to items in other comprehensive loss 19 (297) (78)Total other comprehensive income (loss) 59,844 (57,587) (2,263)Comprehensive loss (94,331) (54,557) (4,319)Less: Comprehensive loss (income) attributable to non-controlling interests 1,566 (146) (170)Comprehensive loss, net $(92,765) $(54,703) $(4,489) The accompanying notes are an integral part of these consolidated financial statements. 70 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Year Ended December 31, (In thousands) 2017 2016 2015 Number of Common Shares Issued Balance at beginning of year 267,997 266,545 265,138 Common stock issued under stock compensation plans, net of shares withheld for employee taxes 1,338 1,452 1,407 Balance at end of year 269,335 267,997 266,545 Common Stock Balance at beginning of year $2,680 $2,665 $2,651 Common stock issued under stock compensation plans, net of shares withheld for employee taxes 13 15 14 Balance at end of year $2,693 $2,680 $2,665 Number of Treasury Stock Shares Purchased Balance at beginning of year (87,487) (77,237) (84,672)Issuance of treasury stock 22 0 7,435 Purchase of treasury stock (1,039) (10,250) 0 Balance at end of year (88,504) (87,487) (77,237)Treasury Stock Balance at beginning of year $(310,993) $(189,753) $(278,036)Issuance of treasury stock 335 0 88,283 Purchase of treasury stock (12,077) (121,240) 0 Balance at end of year $(322,735) $(310,993) $(189,753)Additional Paid-In Capital Balance at beginning of year $1,789,959 $1,789,449 $1,749,593 Stock-based compensation 35,337 34,544 31,961 Common stock issued under stock compensation plans, net of shares withheld for employee taxes (5,767) (8,133) (3,445)Tax deficiency realized upon exercise of stock-based awards 0 (1,280) (2,920)Accretion of redemption preference on redeemable convertible non-controlling interest in Netsmart (43,850) (28,536) 0 Subsidiary issuance of common stock 1,473 Issuance of treasury stock (76) 0 10,017 Warrants issued 3,983 3,915 4,243 Balance at end of year $1,781,059 $1,789,959 $1,789,449 Accumulated Deficit Balance at beginning of year $(187,351) $(190,235) $(188,009)Net (loss) income less net income attributable to non-controlling interests (152,609) 2,884 (2,226)Recognition of previously unrecognized excess tax benefits 1,810 0 0 Balance at end of year $(338,150) $(187,351) $(190,235)Accumulated Other Comprehensive Loss Balance at beginning of year $(61,829) $(4,242) $(1,979)Foreign currency translation adjustments, net 3,352 (1,528) (2,381)Unrecognized gain on derivatives qualifying as cash flow hedges, net of tax 72 361 258 Unrecognized gain (loss) on available for sale securities, net of tax 56,420 (56,420) (140)Balance at end of year $(1,985) $(61,829) $(4,242)Non-controlling interest Balance at beginning of year $40,735 $11,189 $0 Acquisition of non-controlling interest 21 29,400 11,019 Net (loss) income attributable to non-controlling interests (1,566) 146 170 Balance at end of year $39,190 $40,735 $11,189 Total Stockholders’ Equity at beginning of year $1,273,201 $1,419,073 $1,284,220 Total Stockholders’ Equity at end of year $1,160,072 $1,273,201 $1,419,073The accompanying notes are an integral part of these consolidated financial statements. 71 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (In thousands) 2017 2016 2015 Cash flows from operating activities: Net (loss) income $(154,175) $3,030 $(2,056)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 218,537 172,390 161,011 Stock-based compensation expense 38,769 42,877 34,663 Excess tax benefits from stock-based compensation 0 (1,014) (644)Deferred taxes (55,787) (22,621) (2,206)Asset impairment charges 0 4,650 1,544 Write-off of unamortized deferred debt issuance costs 0 5,224 1,433 Impairment of and losses on long-term investments 165,290 0 0 Equity in net (income) loss of unconsolidated investments (821) 7,501 2,100 Other losses, net 4,005 2,579 (614)Changes in operating assets and liabilities (net of businesses acquired): Accounts receivable, net (99,431) (17,826) 3,215 Prepaid expenses and other assets 13,820 13,765 17,614 Accounts payable (18,014) 40,456 (11,953)Accrued expenses 4,631 1,490 (22,974)Accrued compensation and benefits 22,006 (4,106) 10,257 Deferred revenue 126,041 21,722 20,372 Other liabilities 14,544 (1,113) (183)Net cash provided by operating activities 279,415 269,004 211,579 Cash flows from investing activities: Capital expenditures (46,376) (35,510) (18,322)Capitalized software (138,895) (102,472) (49,264)Cash paid for business acquisitions, net of cash acquired (222,310) (994,876) (9,372)Purchases of equity securities, other investments and related intangible assets (5,606) (21,185) (215,786)Other proceeds from investing activities 215 37 3,778 Net cash used in investing activities (412,972) (1,154,006) (288,966)Cash flows from financing activities: Proceeds from sale or issuance of common stock 1,568 84 103,631 Proceeds from issuance of redeemable convertible preferred stock - Netsmart 0 333,605 0 Excess tax benefits from stock-based compensation 0 1,014 644 Taxes paid related to net share settlement of equity awards (7,269) (8,204) (7,062)Payments of capital lease obligations (12,203) (6,277) (598)Credit facility payments (142,748) (157,245) (238,511)Credit facility borrowings, net of issuance costs 374,698 823,535 284,161 Repurchase of common stock (12,077) (121,241) 0 Payment of acquisition financing obligations (4,878) 0 0 Proceeds from sales of subsidiary shares to non-controlling interest 1,494 0 0 Net cash provided by financing activities 198,585 865,271 142,265 Effect of exchange rate changes on cash and cash equivalents 860 (532) (1,178)Net increase (decrease) in cash and cash equivalents 65,888 (20,263) 63,700 Cash, cash equivalents and restricted cash, beginning of period 96,610 116,873 53,173 Cash, cash equivalents and restricted cash, end of period $162,498 $96,610 $116,873 The accompanying notes are an integral part of these consolidated financial statements. 72 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Basis of Presentation and Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements include the accounts of Allscripts Healthcare Solutions, Inc. (“Allscripts”) and its wholly-owned subsidiariesand controlled affiliates. All significant intercompany balances and transactions have been eliminated. Each of the terms “we,” “us,” “our” or the “Company”as used herein refers collectively to Allscripts Healthcare Solutions, Inc. and its wholly-owned and controlled affiliates, unless otherwise stated.Use of EstimatesThe preparation of consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”)requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanyingnotes. Actual results could differ materially from these estimates.Revenue RecognitionRevenue represents the fair value of consideration received or receivable from clients for goods and services provided by us. Software deliveryrevenue consists of all of our proprietary software sales (either as a perpetual license sale or under a subscription delivery model), transaction-related revenueand the resale of hardware. Support and maintenance revenue consists of revenue from post contract client support and maintenance services. Client servicesrevenue consists of revenue from managed services solutions, such as private cloud hosting, outsourcing and revenue cycle management, as well as otherclient services or project-based revenue from implementation, training and consulting services. For some clients, we remotely host the software applicationslicensed from us using our own or third-party servers, which saves these clients the cost of procuring and maintaining hardware and related facilities. Forother clients, we offer an outsourced solution in which we assume partial to total responsibility for a healthcare organization’s IT operations using ouremployees.Revenue from software licensing arrangements where the service element is not considered essential to the functionality of the other elements of thearrangement is recognized upon delivery of the software or as services are performed, provided persuasive evidence of an arrangement exists, fees areconsidered fixed or determinable, and collection of the receivable is probable. The revenue recognized for each separate element of a multiple-elementsoftware contract is based upon vendor-specific objective evidence of fair value (“VSOE”), which is based upon the price the client is required to pay whenthe element is sold separately or renewed. For arrangements in which VSOE only exists for the undelivered elements, the delivered elements (generallysoftware licenses) are accounted for using the residual method.Revenue from software licensing arrangements, where the service element is considered essential to the functionality of the other elements of thearrangement, is accounted for on an input basis under the percentage of completion accounting method using actual hours worked as a percentage of totalexpected hours required by the arrangement, provided that persuasive evidence of an arrangement exists, fees are considered fixed or determinable, andcollection of the receivable is probable. Maintenance and support associated with these agreements is recognized over the term of the support agreementbased on VSOE of the maintenance revenue, which is based upon contractual renewal rates. For presentation in the statement of operations, considerationfrom agreements accounted for under the percentage of completion accounting method is allocated between software delivery and client services revenuebased on VSOE of our hourly services rate multiplied by the amount of hours performed with the residual amount allocated to the software license fee.Fees related to software-as-a-service (“SaaS”) arrangements are recognized as revenue ratably over the contract terms beginning on the date oursolutions are made available to clients. These arrangements include client services fees related to the implementation and set-up of our solutions and aretypically billed upfront and recorded as deferred revenue until our solutions are made available to the client. The implementation and set-up fees arerecognized as revenue ratably over the estimated client relationship period. The estimated length of a client relationship period is based on our experiencewith client contract renewals and consideration of the period over which such clients use our SaaS solutions. 73 Software private cloud hosting services are provided to clients that have purchased a perpetual license to our software solutions and contracted with usto host the software. These arrangements provide the client with a contractual right to take possession of the software at any time during the private cloudhosting period without significant penalty and it is feasible for the client to either use the software on its own equipment or to contract with an unrelated thirdparty to host the software. Private cloud hosting services are not deemed to be essential to the functionality of the software or other elements of thearrangement; accordingly, for these arrangements, we recognize software license fees as software delivery revenue upon delivery, assuming all other revenuerecognition criteria have been met, and separately recognize fees for the private cloud hosting services as client services revenue over the term of the privatecloud hosting arrangement.We also enter into multiple-element arrangements that may include a combination of various software-related and non-software-related products andservices. Management applies judgment to ensure appropriate accounting for multiple deliverables, including the allocation of arrangement considerationamong multiple units of accounting, the determination of whether undelivered elements are essential to the functionality of delivered elements, and thetiming of revenue recognition, among others. In such arrangements, we first allocate the total arrangement consideration based on a selling price hierarchy atthe inception of the arrangement. The selling price for each element is based upon the following selling price hierarchy: VSOE, if available, third-partyevidence of fair value if VSOE is not available, or estimated selling price if neither VSOE nor third-party evidence of fair value is available (discussion as tohow we determine VSOE, third-party evidence of fair value and estimated selling price is provided below). Upon allocation of the arrangement considerationto the software elements as a whole and to individual non-software elements, we then further allocate consideration within the software group to therespective elements following higher-level, industry-specific guidance and our policies described above. After the arrangement consideration has beenallocated to the various elements, we account for each respective element in the arrangement as described above.To determine the selling price in multiple-element arrangements, we establish VSOE using the price charged for a deliverable when sold separatelyand contractual renewal rates for maintenance fees. For non-software multiple element arrangements, third-party evidence of fair value is established byevaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated clients. If we are unable todetermine the selling price because VSOE or third-party evidence of fair value does not exist, we determine an estimated selling price by considering severalexternal and internal factors including, but not limited to, pricing practices, margin objectives, competition, client demand, internal costs and overalleconomic trends. The determination of an estimated selling price is made through consultation with and approval by our management, taking intoconsideration our go-to-market strategy. As our, or our competitors’, pricing and go-to-market strategies evolve, we may modify our pricing practices in thefuture. These events could result in changes to our determination of VSOE, third-party evidence of fair value and estimated selling price. Selling prices areanalyzed on an annual basis or more frequently if we experience significant changes in our selling prices.For those arrangements where the deliverables do not qualify as separate units of accounting, revenue recognition is evaluated for the combineddeliverables as a single unit of accounting and the recognition pattern of the final deliverable will dictate the revenue recognition pattern for the single,combined unit of accounting. Changes in circumstances and client data may result in a requirement to either separate or combine deliverables, such that adelivered item could now meet the separation criteria and qualify as a separate unit of accounting, which may lead to an upward or downward adjustment tothe amount of revenue recognized under the arrangement on a prospective basis.We assess whether fees are considered fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirementsare met. Our payment arrangements with clients typically include milestone-based software license fee payments and payments based upon delivery forservices and hardware.While most of our arrangements include short-term payment terms, we periodically provide extended payment terms to clients from the date ofcontract signing. We do not recognize revenue under extended payment term arrangements until such payments become due. In certain circumstances, whereall other revenue recognition criteria have been met, we occasionally offer discounts to clients with extended payment terms to accelerate the timing of whenpayments are made. Changes to extended payment term arrangements have not had a material impact on our consolidated results of operations.Maintenance fees are recognized ratably over the period of the contract based on VSOE, which is based upon contractual renewal rates. Revenue fromelectronic data interchange services is recognized as services are provided and is determined based on the volume of transactions processed or estimatedselling price.We provide managed services to our clients under arrangements that typically range from three to ten years in duration. Under these arrangements weassume full, partial or transitional responsibilities for a healthcare organization’s IT operations using our employees. Our managed services include facilitiesmanagement, network outsourcing and transition management. Revenue from these arrangements is recognized subsequent to the transition period asservices are performed. 74 Revenue is recognized net of any taxes collected from clients and subsequently remitted to governmental authorities. We record as revenue anyamounts billed to clients for shipping and handling costs and record as cost of revenue the actual shipping costs incurred.We record reimbursements for out-of-pocket expenses incurred as client services revenue in our consolidated statements of operations. These amountstotaled: Year Ended December 31, (In thousands) 2017 2016 2015 Reimbursements for out-of-pocket expenses incurred $10,276 $9,528 $12,873The following table summarizes revenue earned on contracts in excess of billings, both the current and non-current portions, which are included in thebalances of accounts receivable and other assets, respectively, in our consolidated balance sheets. Billings are expected to occur according to the contractterms. December 31, (In thousands) 2017 2016 Revenue earned on contracts in excess of billings Unbilled revenue (current) $133,368 $98,917 Unbilled revenue (long-term) 0 0 Total revenue earned on contracts in excess of billings $133,368 $98,917Fair Value MeasurementsFair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independentsources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information. We utilize valuationtechniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair values of assets and liabilities required to bemeasured at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value in one of the following threecategories:Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Our Level 1 financialinstruments included our investment in NantHealth common stock. Refer to Note 10, “Accumulated Other Comprehensive Loss” for further informationregarding our available for sale marketable securities. Level 2: Inputs, other than quoted prices included in Level 1, are observable for the asset or liability, either directly or indirectly. Our Level 2derivative financial instruments include foreign currency forward contracts valued based upon observable values of spot and forward foreign currencyexchange rates. Refer to Note 11, “Derivative Financial Instruments,” for further information regarding these derivative financial instruments.Level 3: Unobservable inputs that are significant to the fair value of the asset or liability, and include situations where there is little, if any, marketactivity for the asset or liability. Our Level 3 financial instruments include derivative financial instruments comprising the 1.25% Call Option asset and the1.25% embedded cash conversion option liability that are not actively traded. These derivative instruments were designed with the intent that changes intheir fair values would substantially offset, with limited net impact to our earnings. Therefore, we believe the sensitivity of changes in the unobservableinputs to the option pricing model for these instruments is substantially mitigated. Refer to Note 11, “Derivative Financial Instruments,” for furtherinformation regarding these derivative financial instruments. The sensitivity of changes in the unobservable inputs to the valuation pricing model used tovalue these instruments is not material to our consolidated results of operations. 75 The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of the respective balance sheet dates: Balance Sheet December 31, 2017 December 31, 2016 (In thousands) Classifications Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total NantHealth Common Stock Available for sale marketable securities $0 $0 $0 $0 $149,100 $0 $0 $149,100 1.25% Call Option Other assets 0 0 46,578 46,578 0 0 17,080 17,080 1.25% Embedded cash conversion option Other liabilities 0 0 (47,777) (47,777) 0 0 (17,659) (17,659)Foreign exchange derivative assets Prepaid expenses and other current assets 0 1,136 0 1,136 0 1,021 0 1,021 Total $0 $1,136 $(1,199) $(63) $149,100 $1,021 $(579) $149,542As of December 31, 2017, it is not practicable to estimate the fair value of our non-marketable cost and equity method investments primarily becauseof their illiquidity and restricted marketability. The factors we considered in trying to determine fair value include, but are not limited to, available financialinformation, the issuer’s ability to meet its current obligations and the issuer’s subsequent or planned raises of capital. Refer to Note 2, “BusinessCombinations and Other Investments” for additional information about these investments.Our long-term financial liabilities include borrowings outstanding under our Senior Secured Credit Facility and non-recourse borrowings outstandingunder Netsmart’s Credit Agreements (both as defined in Note 6, “Debt”), with carrying values that approximate fair value since the variable interest ratesapproximate current market rates. In addition, as of December 31, 2017, the fair value of the 1.25% Notes (as defined in Note 6, “Debt”) exceeded the 1.25%Notes’ principal balance (or par) by approximately 7%. We utilized the 1.25% Notes’ market trading prices near December 31, 2017 in making this fair valueassessment. See Note 6, “Debt,” for further information regarding our long-term financial liabilities.Financial InstrumentsWe consider all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. The fair values ofthese investments approximate their carrying values.Other investments classified as long-term available for sale securities include certain debt and equity instruments. Debt securities are classified asavailable-for-sale and realized gains and losses are recorded using the specific identification method. Changes in market value, excluding other-than-temporary impairments, are reflected in other comprehensive income. We recognized other-than-temporary impairment charges of $142.2 million onavailable for sale marketable securities during the second quarter of 2017. During the third quarter of 2017, we recognized an additional $20.7 million lossupon the final disposition of these securities in connection with the NantHealth provider and patient engagement solutions business acquisition (refer toNote 2, “Business Combinations and Other Investments”). There were no other-than-temporary impairments related to our long-term available for salesecurities for the years ended December 31, 2016 and 2015.Derivative instruments are recognized as either assets or liabilities and are measured at fair value. The accounting for changes in the fair value of aderivative depends on the intended use of the derivative and the resulting designation.For derivative instruments designated as cash-flow hedges, the effective portion of the derivative’s gain (loss) is initially reported as a component ofother comprehensive income and is subsequently recognized in earnings when the hedged exposure is recognized in earnings. Gains (losses) on derivativesrepresenting either hedge components excluded from the assessment of effectiveness or hedge ineffectiveness are recognized in earnings. See Note 11,“Derivative Financial Instruments,” for information regarding gains and losses from derivative instruments during the years ended December 31, 2017, 2016and 2015. 76 Allowance for Doubtful Accounts ReceivableAccounts receivable are recorded at the invoiced amounts and do not bear interest. An allowance for doubtful accounts is recorded to provide forestimated losses resulting from uncollectible accounts and is based principally on specifically identified amounts where collection is deemed doubtful.Additional non-specific allowances are recorded based on historical experience and management’s assessment of a variety of factors related to the generalfinancial condition of our clients, the industry in which we operate and general economic conditions. We regularly review the collectability of individualaccounts and assess the adequacy of the allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collectionhave been exhausted and the potential for recovery is considered remote. If the financial condition of our clients were to deteriorate, resulting in animpairment of their ability to make payments, additional allowance and related bad debt expense may be required.Contingent LiabilitiesA liability is contingent if the amount is not presently known, but may become known in the future as a result of the occurrence of some uncertainfuture event. We accrue a liability for an estimated loss if we determine that the potential loss is probable of occurring and the amount can be reasonablyestimated. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure isreasonably estimable, and accruals are based only on the information available to our management at the time the judgment is made.The assessment of contingent liabilities, including legal and income tax contingencies, involves the use of estimates, assumptions and judgments. Ourestimates are based on our belief that future events will validate the current assumptions regarding the ultimate outcome of these exposures. However, therecan be no assurance that future events, such as court decisions or Internal Revenue Service (“IRS”) positions, will not differ from our assessments.Fixed AssetsFixed assets are stated at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the relatedassets. The depreciable life of leasehold improvements is the shorter of the lease term or the useful life. Upon asset retirement or other disposition, the fixedasset cost and the related accumulated depreciation or amortization are removed from the accounts, and any gain or loss is included in the consolidatedstatements of operations. Amounts incurred for repairs and maintenance are expensed as incurred.Business CombinationsGoodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assetsacquired and the liabilities assumed. While we use our best estimates and assumptions as a part of the purchase price allocation process to accurately valuethe assets acquired, including intangible assets, and the liabilities assumed at the acquisition date, our estimates are inherently uncertain and subject torefinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair valuesof the assets acquired and the liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period or finaldetermination of the values of assets acquired or the liabilities assumed, whichever comes first, any subsequent adjustments are reflected in our consolidatedstatements of operations.Goodwill and Intangible AssetsGoodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized but are tested forimpairment annually or between annual tests when an impairment indicator exists. If an optional qualitative goodwill impairment assessment is notperformed, we are required to determine the fair value of each reporting unit. If a reporting unit’s fair value is lower than its carrying value, we must determinethe amount of implied goodwill that would be established if the reporting unit was hypothetically acquired on the impairment test date. If the carryingamount of a reporting unit’s goodwill exceeds the amount of implied goodwill, an impairment loss equal to the excess would be recorded. The recoverabilityof indefinite-lived intangible assets is assessed by comparison of the carrying value of the asset to its estimated fair value. If we determine that the carryingvalue of the asset exceeds its estimated fair value, an impairment loss equal to the excess would be recorded. 77 The determination of the fair value of our reporting units is based on a combination of a market approach, that considers benchmark company marketmultiples, and an income approach, that utilizes discounted cash flows for each reporting unit and other Level 3 inputs. Under the income approach, wedetermine fair value based on the present value of the most recent cash flow projections for each reporting unit as of the date of the analysis and calculate aterminal value utilizing a terminal growth rate. The significant assumptions under this approach include, among others: income projections, which aredependent on sales to new and existing clients, new product introductions, client behavior, competitor pricing, operating expenses, the discount rate, and theterminal growth rate. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as our expectationsof future performance and the expected future economic environment, which are partly based upon our historical experience. Our estimates are subject tochange given the inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on our judgment ofthe rates that would be utilized by a hypothetical market participant. As part of the goodwill impairment testing, we also consider our market capitalization inassessing the reasonableness of the combined fair values estimated for our reporting units.Accounting guidance also requires that definite-lived intangible assets be amortized over their respective estimated useful lives and reviewed forimpairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We estimate the useful lives of ourintangible assets and ratably amortize the value over the estimated useful lives of those assets. If the estimates of the useful lives should change, we willamortize the remaining book value over the remaining useful lives or, if an asset is deemed to be impaired, a write-down of the value of the asset may berequired at such time.Long-Lived Assets and Long-Lived Assets to Be Disposed OfWe review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected tobe generated by the asset. If assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amountof the assets exceeds the fair value of the assets.Software Development CostsWe capitalize purchased software upon acquisition if it is accounted for as internal-use or if it meets the future alternative use criteria. We capitalizeincurred labor costs for software development from the time technological feasibility of the software is established, or when the preliminary project phase iscompleted in the case of internal use software, until the software is available for general release. Research and development costs and other computer softwaremaintenance costs related to software development are expensed as incurred. We estimate the useful life of our capitalized software and amortize its valueover that estimated life. If the actual useful life is shorter than our estimated useful life, we will amortize the remaining book value over the remaining usefullife or the asset may be deemed to be impaired and, accordingly, a write-down of the value of the asset may be recorded as a charge to earnings. Upon theavailability for general release, we commence amortization of the capitalized software costs on a product by product basis. Amortization of capitalizedsoftware is recorded using the greater of (i) the ratio of current revenues to total and anticipated future revenues for the applicable product or (ii) the straight-line method over the remaining estimated economic life, which is estimated to be three to five years.At each balance sheet date, the unamortized capitalized costs of a software product are compared with the net realizable value of that product. The netrealizable value is the estimated future gross revenues from that product reduced by the estimated future costs of completing and disposing of that product,including the costs of performing maintenance and client support required to satisfy our responsibility set forth at the time of sale. The amount by which theunamortized capitalized costs of a software product exceed the net realizable value of that asset is written off. If we determine in the future that the value ofthe capitalized software could not be recovered, a write-down of the value of the capitalized software to its recoverable value may be recorded as a charge toearnings.The unamortized balances of capitalized software were as follows: December 31, (In thousands) 2017 2016 Software development costs $318,824 $321,265 Less: accumulated amortization (96,635) (157,386)Software development costs, net $222,189 $163,879 78 Capitalized software development costs, write-offs included in asset impairment changes and amortization of capitalized software development costsincluded in cost of revenue are shown in the table below. Capitalized software development costs for the year ended December 31, 2016 include $44 millionof third-party software purchases to supplement our internal software development efforts, of which $24 million was accrued as of December 31, 2016 andpaid during 2017. Year Ended December 31, (In thousands) 2017 2016 2015 Capitalized software development costs $115,394 $126,003 $46,464 Write-offs of capitalized software development costs $0 $4,625 $0 Amortization of capitalized software development costs $57,084 $43,274 $46,842Redeemable Convertible Non-Controlling Interest – Netsmart The redeemable convertible non-controlling interest reported in the mezzanine equity section of the accompanying consolidated balance sheet as ofDecember 31, 2017 and 2016 represents the redemption value of the Class A Preferred Units issued as part of the formation of Nathan Holding LLC in April2016. Refer to Note 2, “Business Combinations and Other Investments” for additional information about the formation of this joint business entity and theredemption terms of the Class A Preferred Units.The Class A Preferred Units do not have a mandatory redemption date and, with certain exceptions, can be redeemed no earlier than five years fromtheir issuance date. They also contain a minimum liquidation preference feature and the value of such feature is accreted using the effective interest method.The Class A Preferred Units were not redeemable as of December 31, 2017.A rollforward of the balance of redeemable convertible non-controlling interest for the year ended December 31, 2017 follows:(In thousands) Balance as of December 31, 2016 $387,685 Issuance of redeemable convertible non-controlling interest 0 Accretion of redemption preference on redeemable convertible non-controlling interest 43,850 Balance as of December 31, 2017 $431,535Income TaxesWe account for income taxes using the liability method, which requires the recognition of deferred tax assets or liabilities for the tax-effectedtemporary differences between the financial reporting and tax bases of our assets and liabilities and for net operating loss and tax credit carryforwards. Theobjectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities andassets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required inaddressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The deferred tax assets arerecorded net of a valuation allowance when, based on the weight of available evidence, we believe it is more likely than not that some portion or all of therecorded deferred tax assets will not be realized in future periods. We consider many factors when assessing the likelihood of future realization of our deferredtax assets, including recent cumulative earnings experience, expectations of future taxable income, the ability to carryback losses and other relevant factors.In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. Achange in the assessment of the outcomes of such matters could materially impact our consolidated financial statements.The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities foranticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes may be required. If we ultimately determine thatpayment of these amounts is unnecessary, then we reverse the liability and recognize a tax benefit during the period in which we determine that the liabilityis no longer necessary. We also recognize tax benefits to the extent that it is more likely than not that our positions will be sustained if challenged by thetaxing authorities. To the extent we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our liabilities,our effective tax rate in a given period may be materially affected. An unfavorable tax settlement would require cash payments and may result in an increasein our effective tax rate in the year of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the year ofresolution. We report interest and penalties related to uncertain income tax positions in the income tax (provision) benefit line of our consolidated statementsof operations. 79 We file income tax returns in the United States federal jurisdiction, numerous states in the United States and multiple countries outside of the UnitedStates.Earnings (Loss) Per ShareBasic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average shares of common stock outstanding. For purposesof calculating diluted earnings per share, the denominator includes both the weighted average shares of common stock outstanding and dilutive commonstock equivalents. Dilutive common stock equivalents consist of stock options, restricted stock unit awards and warrants calculated under the treasury stockmethod.The calculations of earnings (loss) per share are as follows: Year Ended December 31, (In thousands, except per share amounts) 2017 2016 2015 Basic Loss per Common Share: (Loss) income from continuing operations, net of tax $(158,851) $3,030 $(2,056)Less: Net income attributable to non-controlling interests $1,566 $(146) $(170)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart $(43,850) $(28,536) $0 Net loss from continuing operations attributable to Allscripts Healthcare Solutions, Inc. stockholders $(201,135) $(25,652) $(2,226)Net income from discontinued operations attributable to Allscripts Healthcare Solutions, Inc. stockholders $4,676 $0 $0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders $(196,459) $(25,652) $(2,226) Weighted-average common shares outstanding 180,830 186,188 185,082 Basic Loss from continuing operations per Common Share $(1.12) $(0.14) $(0.01)Basic Income from discontinued operations per Common Share $0.03 $0 $0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders per Common Share $(1.09) $(0.14) $(0.01) Diluted Loss per Common Share: (Loss) income from continuing operations, net of tax $(158,851) $3,030 $(2,056)Less: Net income attributable to non-controlling interests $1,566 $(146) $(170)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - Netsmart $(43,850) $(28,536) $0 Net loss from continuing operations attributable to Allscripts Healthcare Solutions, Inc. stockholders $(201,135) $(25,652) $(2,226)Net income from discontinued operations attributable to Allscripts Healthcare Solutions, Inc.stockholders $4,676 $0 $0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders $(196,459) $(25,652) $(2,226) Weighted-average common shares outstanding 180,830 186,188 185,082 Dilutive effect of stock options, restricted stock unit awards and warrants 0 0 0 Weighted-average common shares outstanding assuming dilution 180,830 186,188 185,082 Diluted Loss from continuing operations per Common Share $(1.12) $(0.14) $(0.01)Diluted Income from discontinued operations per Common Share $0.03 $0 $0 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders per Common Share $(1.09) $(0.14) $(0.01) As a result of the net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders for the years ended December 31, 2017, 2016 and 2015, weused basic weighted-average common shares outstanding in the calculation of diluted loss per share for each of these years, since the inclusion of any stockequivalents would be anti-dilutive. 80 The following stock options, restricted stock unit awards and warrants are not included in the computation of diluted earnings (loss) per share as theeffect of including such stock options, restricted stock unit awards and warrants in the computation would be anti-dilutive: Year Ended December 31, (In thousands) 2017 2016 2015 Shares subject to anti-dilutive stock options, restricted stock unit awards and warrants excluded from calculation 26,515 25,277 25,063Stock-Based CompensationWe account for stock-based compensation in accordance with GAAP, which requires the measurement and recognition of compensation expense forall share-based payment awards made to employees and non-employee directors based on their estimated fair value. With the exception of Netsmart, wemeasure stock-based compensation cost at the grant date based on the fair value of the award and recognize the expense over the requisite service periodtypically on a straight-line basis, net of estimated forfeitures. Netsmart’s stock-based option awards are liability-classified due to the option to call and cashsettle such awards. We recognize stock-based compensation cost for awards with performance conditions if and when we conclude that it is probable that theperformance conditions will be achieved. With the exception of Netsmart, whose awards are marked-to-market each reporting period, the fair value of service-based restricted stock units and restricted stock awards is measured at their underlying closing share price on the date of grant. The fair value of market-basedrestricted stock units is measured using the Monte Carlo pricing model. The net proceeds from stock-based compensation activities are reflected as afinancing activity within the accompanying consolidated statements of cash flows. We settle employee stock option exercises and stock awards with newlyissued common shares.Employee Benefit PlansWe provide employees with defined contribution savings plans. We recognize expense for our contributions to the savings plans at the timeemployees make contributions to the plans and we contributed the following amounts to these plans: Year Ended December 31, (In thousands) 2017 2016 2015 Company contributions to employee benefit plans $18,861 $18,329 $16,397 Foreign CurrencyThe determination of the functional currency of our foreign subsidiaries is made based on the appropriate economic and management indicators. Ourforeign subsidiaries use the local currency of their respective countries as the functional currency, with the exception of our operating subsidiaries in Indiaand Israel which use the United States dollar as a functional currency. The assets and liabilities of foreign subsidiaries whose functional currency is the localcurrency are translated into United States dollars at the exchange rates in effect at the consolidated balance sheet date, while revenues and expenses aretranslated at the average rates of exchange during the year. Translation gains and losses are not included in determining net income or loss but are includedas a separate component of accumulated other comprehensive loss. Gains and losses resulting from foreign currency transactions are included in determiningnet income or loss and have not been material in any years presented in the accompanying consolidated statements of operations. We periodically enter intonon-deliverable forward foreign currency exchange contracts in order to hedge a portion of our forecasted future Indian Rupee-denominated (“INR”)expenses against foreign currency fluctuations between the United States dollar and the INR. See Note 11, “Derivative Financial Instruments,” forinformation regarding these foreign currency exchange contracts.Concentrations of Credit RiskFinancial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, marketable securities and tradereceivables. We primarily maintain our cash balances with one major commercial bank domestically and several commercial banks internationally.We sell our products and services to healthcare providers. Credit risk with respect to trade receivables is generally diversified due to the large numberof clients and their geographic dispersion. To reduce credit risk, we perform ongoing credit evaluations of significant clients and their payment histories. Ingeneral, we do not require collateral from our clients, but we do enter into advance deposit agreements, if appropriate. 81 The majority of our revenue is derived from clients located in the United States. The majority of long-lived assets are also located in the United States.No single client accounted for more than 10% of our revenue in the years ended December 31, 2017, 2016 and 2015. No client represented more than 10% ofaccounts receivable as of December 31, 2017 or 2016.Recently Adopted Accounting PronouncementsIn March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-07, Investments – Equity Methodand Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting (“ASU 2016-07”). The guidance in ASU 2016-07 eliminatesthe requirement that, when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree ofinfluence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method hadbeen in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost ofacquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as ofthe date the investment becomes qualified for equity method accounting. The amendments also require that an entity that has an available-for-sale equitysecurity that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated othercomprehensive income at the date the investment becomes qualified for use of the equity method. ASU 2016-07 is effective for interim and annual periodsbeginning after December 15, 2016, and should be applied prospectively. Early application is permitted. We adopted this new guidance effective January 1,2017 and the adoption did not have any impact on our consolidated financial statements.In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements toShare-Based Payment Accounting (“ASU 2016-09”). The Company adopted ASU 2016-09 effective January 1, 2017, which requires that tax effects related toemployee share-based payments be recorded prospectively as a component of the provision for income taxes, thus potentially increasing the volatility in oureffective tax rate (see Note 7, “Income Taxes”). Additionally, we prospectively adopted the requirement to present recognized excess tax benefits related toemployee share-based payments as an operating activity in the accompanying Consolidated Statements of Cash Flows. ASU 2016-09 also eliminatesprospectively the requirement to consider anticipated tax windfalls and shortfalls in the calculation of assumed proceeds under the treasury stock methodused for computing the dilutive effect of share-based payment awards in the calculation of diluted earnings per share. Finally, ASU 2016-09 requires therecognition of excess tax benefits related to employee share-based payments, regardless of whether the tax deduction reduces taxes payable. As part of theadoption of this requirement, we decreased the opening balance of accumulated deficit by $1.8 million to recognize excess tax benefits not previouslyrecorded since they did not reduce taxes payable. The adoption of the remaining requirements of ASU 2016-09 did not have a material impact on ourfinancial position or results of operation.In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain CashReceipts and Cash Payments (“ASU 2016-15”). The guidance in ASU 2016-15 eliminates the diversity in practice related to the classification of certain cashreceipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annualperiods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We early adopted this newguidance effective January 1, 2017 and the adoption did not have any impact on our consolidated financial statements.In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of ModificationAccounting (“ASU 2017-09”). The guidance in ASU 2017-09 clarifies when to account for a change to the terms or conditions of a share-based paymentaward as a modification. ASU 2017-09 is effective prospectively for annual periods beginning after December 15, 2017, and interim periods within thoseannual periods. Early adoption is permitted, including adoption in an interim period. We early adopted this new guidance effective June 1, 2017 and theadoption did not have any impact on our consolidated financial statements.Accounting Pronouncements Not Yet AdoptedIn May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (“ASU 2014-09”), tosupersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenue when promised goods orservices are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09defines a five-step process to achieve this principle and, in doing so, it is possible more judgment and estimates may be required within the revenuerecognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variableconsideration to include in the transaction price and allocating the transaction price to each separate performance obligation. As issued, ASU 2014-09 waseffective for us for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. On August 12, 2015,the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 by one year to annual 82 reporting periods beginning after December 15, 2017, while also permitting companies to voluntarily adopt the new revenue standard as of the originaleffective date. In addition, during 2016, the FASB issued ASU 2016-08, ASU 2016-10, 2016-11, 2016-12 and 2016-20, all of which clarify certainimplementation guidance within ASU 2014-09.The new revenue recognition guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospectivemethod), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospectivemethod). We have decided to adopt the standard effective January 1, 2018 using the modified retrospective method.We have completed our assessment of our systems, available data and processes that will be affected by the implementation of this new guidance.The Company’s formal accounting policies have been established along with updates to our processes as well as implementing necessary changes to be ableto comply with the new requirements. Evaluation of the enactment of such policies and necessary changes is ongoing from both a financial statement as wellas from an internal control perspective. Through evaluation of the standard’s requirements, the Company plans to utilize several practical expedientsincluding (i) viewing shipping and handling as a fulfillment cost versus a distinct performance obligation, and (ii) the right to invoice expedient as it relatesto transaction-related revenue activities. Based on the results of our assessment to date, we anticipate this standard will have an impact, which could besignificant, on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard we remain convinced the mostsignificant impact relates to our accounting for software license revenue. We expect revenue related to hardware sales, software-as-a-service-based offerings,client services, electronic data interchange services, and managed services to remain substantially unchanged. We expect to recognize a significant portion oflicense revenue upfront rather than be restricted to payment amounts due under extended payment term contracts as required under the current guidance. Wealso expect to recognize license revenue at a point in time rather than over the subscription period from certain multi-year software subscription contracts thatinclude both software licenses and software support and maintenance. Due to the complexity of certain of our license subscription contracts, the actualrevenue license recognition treatment required under the new standard will be dependent on contract-specific terms and may vary in some instances fromupfront recognition. However, at the current time, we cannot reasonably estimate a specific dollar impact relating to this change in software license revenuerecognition. Additionally, we currently only capitalize direct sales commissions that are specifically associated with new or renewal contracts. The new revenuerecognition guidance requires the capitalization of all incremental costs of obtaining a contract with a customer that an entity expects to recover. As part ofour implementation efforts, we have identified certain indirect commissions and other payments that would be eligible for capitalization under the newguidance because they are also incremental costs solely associated with new or renewal contracts that we expect to recover. In addition, there are certain costsrelated to the fulfilment of contracts which will be capitalized. As result, we expect to record a deferral for such costs of approximately $11 million uponadoption of the new guidance on January 1, 2018.In January 2016, the FASB issued Accounting Standards Update No. 2016-01, “Recognition and Measurement of Financial Assets and FinancialLiabilities” (“ASU 2016-01”). The amendments in ASU 2016-01 modify the requirements related to the measurement of certain financial instruments in thestatement of financial condition and results of operation. Equity investments (except those accounted for under the equity method of accounting or those thatresult in consolidation of the investee), are required to be measured at fair value with changes in fair value recognized in net income. An entity may continueto elect to measure equity investments which do not have a readily determinable fair value at cost with adjustments for impairment, if any, and observablechanges in price. In addition, for a liability (other than a derivative liability) that an entity measures at fair value, any change in fair value related to theinstrument-specific credit risk, that is the entity’s own-credit, should be presented separately in other comprehensive income and not as a component of netincome. ASU 2016-01 also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for salesecurities in combination with the entity’s other deferred tax assets. ASU 2016-01 is effective for interim and annual periods beginning after December 15,2017 with early adoption permitted solely for the instrument-instrument specific credit risk for liabilities measured at fair value. The amendments should beapplied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equitysecurities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as ofthe date of adoption. We plan to adopt ASU 2016-01 effective January 1, 2018 and do not expect any immediate impact upon adoption.In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) intended to improve financialreporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets and liabilities forthe rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim andannual periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact of this accounting guidance,including the timing of adoption.In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement ofCredit Losses on Financial Instruments (“ASU 2016-13”). The guidance in ASU 2016-13 replaces the incurred loss impairment methodology under currentGAAP. The new impairment model requires immediate recognition of estimated credit losses expected to occur for most financial assets and certain otherinstruments. For available-for-sale debt securities with unrealized 83 losses, the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. ASU 2016-13 is effective for annual periodsbeginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for fiscal years beginning after December15, 2018. We are currently in the process of evaluating this new guidance, which we expect to have an impact on our consolidated financial statements andresults of operations.In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of aBusiness (“ASU 2017-01”). ASU 2017-01 provides new accounting guidance to assist an entity in evaluating when a set of transferred assets and activities isa business. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be appliedprospectively to any transactions occurring within the period of adoption. Early adoption is permitted, including for interim or annual periods in which thefinancial statements have not been issued or made available for issuance. We plan to adopt ASU 2017-01 effective January 1, 2018 and do not expect anyimmediate impact upon adoption.In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Testfor Goodwill Impairment (“ASU 2017-04”), which provides new accounting guidance to simplify the accounting for goodwill impairment. ASU 2017-04removes Step Two of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairmentwill equal the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill assigned to thereporting unit. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitativeassessment to determine if a quantitative impairment test is necessary. ASU 2017-04 is effective for annual and interim periods in fiscal years beginning afterDecember 15, 2019 with early adoption permitted for any goodwill impairment tests performed after January 1, 2017. The new guidance is to be appliedprospectively. We are currently evaluating the impact of this accounting guidance, including the timing of adoption.In August 2017, the FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements toAccounting for Hedging Activities (“ASU 2017-12”), which provides new accounting guidance to simplify and improve the reporting of hedgingrelationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition to that main objective, theamendments in this Update make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interimperiod after the issuance of this Update. We are currently evaluating the impact of this accounting guidance, including the timing of adoption.We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on ourconsolidated financial statements. 84 2. Business Combinations and Other Investments2017 Business CombinationsAcquisition of DeVero On July 17, 2017, Netsmart (as defined below) completed the acquisition of DeVero, Inc. (“DeVero”), a healthcare technology company that developselectronic medical record solutions for home healthcare and hospice, for an aggregate purchase price of $50.5 million in cash. The purchase price was fundedthrough incremental borrowings under Netsmart’s credit facilities. The allocation of the aggregate consideration is as follows: $32.4 million of goodwill;$19.0 million of intangible assets related to customer relationships; $6.9 million of intangible assets related to technology; $0.5 million of intangible assetsrelated to product trademarks; $2.0 million of cash; other assets of $0.8 million; accounts payable and accrued expenses of $2.6 million; deferred revenue of$0.9 million; and deferred income taxes of $7.6 million. This allocation is preliminary and subject to changes, which could be significant, as appraisals oftangible and intangible assets are finalized, and additional information becomes available. The acquired intangible assets related to technology and customerrelationships will be amortized over their estimated useful lives of 7-20 years using a method that approximates the pattern of economic benefits to be gainedby the intangible assets. The goodwill is not deductible for tax purposes. We incurred $0.4 million of acquisition costs which are included in selling, generaland administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2017. The results of operations ofDeVero were not material to our consolidated results of operations for the year ended December 31, 2017.Acquisition of the Patient/Provider Engagement Solutions Business from NantHealth, Inc. On August 25, 2017, the Company completed the acquisition of substantially all of the assets relating to the provider/patient engagement solutionsbusiness of NantHealth, Inc. (“NantHealth”). The consideration for the transaction included the 15,000,000 shares of common stock of NantHealth that hadbeen held by the Company as available for sale securities and which had a fair value of $42.8 million at the time of the transaction. The transaction alsoincludes adjustments for working capital and deferred revenue obligations, as well as a modification of the commercial agreement between the parties. Totalconsideration for the transaction was as follows: (In thousands) Cash $1,742 Add: Final net working capital surplus 906 Add: NantHealth common stock 42,750 Less: Value assigned to modification of existing commercial agreement with NantHealth (22,900)Total consideration for NantHealth provider/patient solutions business $22,498 The allocation of the fair value of the consideration transferred as of the acquisition date of August 25, 2017 is shown in the table below. Thisallocation is preliminary and subject to changes, which could be significant, as appraisals of tangible and intangible assets are finalized, and additionalinformation becomes available. The goodwill is expected to be deductible for tax purposes. (In thousands) Cash and cash equivalents $21 Accounts receivable, net 2,069 Prepaid expenses and other current assets 1,735 Fixed assets 3,401 Intangible assets 12,442 Goodwill 13,350 Other assets 204 Accounts payable and accrued expenses (1,519)Deferred revenue (9,205)Net assets acquired $22,498 85 The following table summarizes the estimated fair values of the most significant identifiable intangible assets and their estimated useful lives: Useful Life Fair Value Description (In years) (In thousands) Customer Relationships 19 $9,200 Technology 5 3,000 Tradenames 5 200 $12,400Acquisition of the Enterprise Information Solutions Business from McKesson Corporation On October 2, 2017, Allscripts Healthcare, LLC, a wholly-owned subsidiary of the Company (“Healthcare LLC”), completed the transactionscontemplated by a purchase agreement (the “Purchase Agreement”) with McKesson Corporation (“McKesson”), pursuant to which Healthcare LLC purchasedMcKesson’s Enterprise Information Solutions Business division (the “EIS Business”), which provides certain software solutions and services to hospitals andhealth systems, by acquiring all of the outstanding equity interests of two indirect, wholly-owned subsidiaries of McKesson. The acquisition of the EISBusiness was based on a total enterprise value of $185 million as shown in the table below. The net consideration paid was funded through incrementalborrowings under our debt facilities. (In thousands) Aggregate purchase price $185,000 Add: Final net working capital surplus 1,331 Less: Assumption of restructuring indebtedness (16,834)Net consideration paid in cash for the EIS Business $169,497 The EIS Business acquisition is being accounted for under the acquisition method of accounting in accordance with Accounting StandardsCodification Topic 805, Business Combinations. Under the acquisition method of accounting, the fair value of consideration transferred for the EIS Businesswas allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date with theremaining unallocated amount recorded as goodwill. We have performed a preliminary valuation analysis as of the acquisition date of October 2, 2017 of thefair value of the EIS Business’ assets and liabilities. Our estimates and assumptions are subject to change, which could be significant, as appraisals ofintangible assets are finalized, and as additional information becomes available during the measurement period (up to one year from the acquisitiondate). The goodwill is expected to be deductible for tax purposes. Among the factors that contributed to a purchase price resulting in the recognition ofgoodwill were the expected growth and synergies that we believe will result from the integration of the EIS business with our software solutions and servicesto hospitals and health systems. The following table summarizes the preliminary allocation of the purchase consideration as of the acquisition date: (In thousands) Cash and cash equivalents $1,068 Accounts receivable, net 65,632 Prepaid expenses and other current assets 19,633 Fixed assets 9,808 Intangible assets 136,200 Goodwill 29,227 Other assets 1,601 Accounts payable and accrued expenses (32,497)Deferred revenue (58,490)Other liabilities (2,685)Net assets acquired $169,497 86 The acquired intangible assets are being amortized over their useful lives, using a method that approximates the pattern of economic benefits to begained 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) Customer Relationships 10 $75,200 Technology 7 57,200 Tradenames 7 3,800 $136,200Acquisition costs related to the EIS Business acquisition totaled $4.8 million and are included in selling, general and administrative expenses in theaccompanying consolidated statement of operations for the year ended December 31, 2017. 87 Asset Purchase Agreement with Third Party On March 31, 2017, Netsmart entered into an Asset Purchase Agreement with a third party, for an aggregate cash consideration of $4.0 million, toacquire intellectual property, certain contractual relationships and certain associates. This transaction has been accounted for as a business combination. TheAsset Purchase Agreement provides for contingent consideration to be paid to the third party based on the number of customers of the third party that migrateto Netsmart’s electronic health record product. The value of the contingent consideration has been estimated to be $0.5 million at March 31, 2017. Netsmartaccrued $0.6 million at December 31, 2017 within other liabilities. This amount represents the discounted fair value of the contingent consideration. Thistransaction resulted in the recognition of goodwill of $4.4 million. The goodwill is expected to be deductible for tax purposes. We have finalized theallocation of the fair value of the consideration transferred as of December 31, 2017.2016 Business CombinationsFormation of Joint Business Entity and Acquisition of Netsmart, Inc. On March 20, 2016, we entered into a Contribution and Investment Agreement (the “Contribution Agreement”) with GI Netsmart Holdings LLC, aDelaware limited liability company (“GI Partners”) to form a joint business entity, Nathan Holding LLC, a Delaware limited liability company (“Nathan”).The formation of Nathan was completed on April 19, 2016. As a result, pursuant to, and subject to the terms and conditions of, the Contribution Agreement,Nathan issued to Allscripts Class A Common Units in exchange for Allscripts contributing its HomecareTM business and cash to Nathan and issued to GIPartners Class A Preferred Units in exchange for cash.The Nathan operating agreement provides that the Class A Preferred Units entitle the owners at any time and from time to time following the later of(A) the earlier of (I) the fifth anniversary of the effective date and (II) a change in control of Allscripts, and (B) the earlier of (I) the payment in full of theobligations under the Netsmart Credit Agreements and the termination of any commitments thereunder or (II) with respect to any proposed redemption, suchearlier date for such redemption consented to in writing by the required lenders under each of the credit facilities under which obligations remain unpaid orunder which commitments continue, to redeem all or any portion of their Class A Preferred Units for cash at a price per Unit equal to the Class A Preferredliquidation preference for each such Class A Preferred Unit as of the date of such redemption. The liquidation preference is equal to the greater of (i) a returnof the original issue price plus a preferred return (accruing on a daily basis at the rate of 11% per annum and compounding annually on the last day of eachcalendar year) or (ii) the as-converted value of Class A Common Units in Nathan. The consolidated statement of operations for the year ended December 31,2016 gives effect to the accretion of the 11% redemption preference as part of the calculation of net income (loss) attributable to Allscripts stockholders.Also on April 19, 2016, Nathan acquired Netsmart, Inc., a Delaware corporation, pursuant to the Agreement and Plan of Merger, dated as of March 20,2016 (the “Merger Agreement”), by and among Nathan Intermediate LLC, a Delaware limited liability company and a wholly-owned subsidiary of Nathan(“Intermediate”), Nathan Merger Co., a Delaware corporation and a wholly-owned subsidiary of Intermediate (“Merger Sub”), Netsmart, Inc. and GenstarCapital Partners V, L.P., as the equityholders’ representative. Pursuant to the Merger Agreement, on April 19, 2016, Merger Sub was merged with and intoNetsmart, Inc., with Netsmart, Inc. surviving as a wholly-owned subsidiary of Intermediate (the “Merger”). As a result of these transactions (the “NetsmartTransaction” or “Netsmart Acquisition”), the establishment of Nathan combined the Allscripts HomecareTM business with Netsmart, Inc. In September 2016,Nathan amended its certificate of incorporation with the State of Delaware and changed its name from Nathan Holding LLC to Netsmart LLC. Throughout therest of this Form 10-K, Netsmart LLC is referred to as “Netsmart”.At the effective time of the Merger, shares of Netsmart, Inc.’s common stock issued and outstanding immediately prior to the effective time wereconverted into the right to receive a pro rata share of $950 million, reduced by net debt and subject to working capital and other adjustments (the“Purchase Price”). Each vested outstanding option to acquire shares of Netsmart, Inc.’s common stock became entitled to receive a pro rata share of thePurchase Price, less applicable exercise prices of the options. Certain holders of shares of Netsmart, Inc.’s common stock, who were members of Netsmart,Inc.’s management, exchanged a portion of such shares for equity interests in Nathan, in lieu of receiving their pro rata share of the Purchase Price, and certainholders of options to purchase shares of Netsmart, Inc.’s common stock, who were also members of Netsmart, Inc.’s management, invested a portion of suchholder’s proceeds from the Merger in equity interests in Nathan (collectively, the “Rollover”). After the completion of the Merger and the Rollover, Allscriptsowned 49.1%, GI Partners owned 47.2% and Netsmart’s management owned 3.7% of the outstanding equity interests in Netsmart, in each case on an as-converted basis. As part of the Netsmart Transaction, we deposited $15 million in an escrow account to be used by Netsmart to facilitate the integration of ourHomecareTM business within Netsmart over the next 4 years, at which time the restriction on any unused funds will lapse. As of December 31, 2017, there is$10.0 million remaining in the escrow account. 88 The acquisition of Netsmart, Inc. by Nathan was completed for an aggregate consideration of $937 million. The consideration was funded by thesources of funds as described in the table below. The new Netsmart term loans are non-recourse to Allscripts and its wholly-owned subsidiaries. A portion ofthe debt proceeds were used to extinguish Netsmart, Inc.’s existing debt of $325 million, including accrued interest and fees of $2 million. (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. $937,066Under the acquisition method of accounting, the fair value of consideration transferred for Netsmart, Inc. was allocated to the tangible and intangibleassets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date with the remaining unallocated amount recorded asgoodwill. During the year ended December 31, 2016, we recorded several measurement period adjustments, which included $3.6 million decrease in accountsreceivable, net, $0.3 million increase in prepaid expenses and other assets, $0.3 million decrease in other assets, $0.7 million increase in deferred taxes, net,$0.6 million decrease in other liabilities and $3.7 million increase in the residual allocation to goodwill.The final allocation of the fair value of the consideration transferred, including measurement period adjustments through December 31, 2017, is shownin 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 $937,066Allscripts’ contribution of its HomecareTM business to Nathan was deemed to be a transaction between entities under common control and the netassets of the HomecareTM business were contributed at carryover basis.As noted above, the formation of Netsmart resulted in the merger of our HomecareTM business with Netsmart, Inc.’s behavioral health technologybusiness. As a result, Netsmart became one of the largest healthcare IT companies serving the health and human services sector, which includes behavioralhealth, public health and child and family services. Among the factors that contributed to a purchase price resulting in the recognition of goodwill were theexpected growth and synergies that we believe will result from the integration of our HomecareTM business with Netsmart, Inc.’s product offerings. Thegoodwill is not deductible for tax purposes.The acquired intangible assets are being amortized over their useful lives, using a method that approximates the pattern of economic benefits to begained 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 $409,500Acquisition costs related to the Netsmart Acquisition totaled $4.1 million and are included in selling, general and 89 administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2016. No acquisition costs related to theNetsmart Acquisition were recognized during the year ended December 31, 2017.Acquisition of HealthMEDXOn October 27, 2016, Netsmart completed the acquisition of HealthMEDX, LLC, a Delaware limited liability company (“HealthMEDX”), for anaggregate consideration of $39.2 million. HealthMEDX is a provider of electronic medical record solutions for long-term and post-acute care includingcontinuing care retirement communities, assisted living, independent living, skilled nursing and home care providers. The aggregate consideration was funded by the sources of funds as shown in the table below and includes a contingent consideration payable tothe HealthMEDX unitholders in the first half of 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 costof capital rate used as part of the HealthMEDX valuation. The outstanding contingent consideration of $0.9 million is included in accrued expenses in theaccompanying consolidated balance sheet as of December 31, 2017. The decrease in value of the contingent consideration was the result of a revised estimateof the liability due. The portion of the aggregate consideration that was paid in cash at closing was funded with borrowings under the Netsmart CreditAgreements. (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 $39,183The final allocation of the fair value of the consideration transferred is shown in the table below: (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 18,568 Other assets 45 Accounts payable (768)Accrued expenses (1,427)Deferred revenue (1,838)Current maturities of capital lease obligations (808)Long-term maturities of debt and capital lease obligations (503)Net assets acquired $39,183We believe that the HealthMEDX acquisition will complement the existing HomecareTM business and result in higher future revenue and operatingsynergies. These factors contributed to a purchase price resulting in the recognition of goodwill. The goodwill is expected to be deductible for tax purposes.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 Supplemental Information 90 The supplemental pro forma results below were calculated after applying our accounting policies and adjusting the results of the EIS Business toreflect (i) the additional amortization that would have been charged resulting from the fair value adjustments to intangible assets and (ii) the additionalinterest expense associated with Allscripts’ borrowings under its revolving facility, and (iii) the additional amortization of the estimated adjustment todecrease the assumed deferred revenue obligations to fair value that would have been charged assuming the acquisition occurred on January 1, 2016,together with the consequential tax effects. Supplemental pro forma results for the year ended December 31, 2017 were also adjusted to exclude acquisition-related and transaction costs incurred during this period. Supplemental pro forma results for the year ended December 31, 2016 were adjusted to include theseitems. We also acquired 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. The pro forma results below give effect to (i) theNantHealth business acquisition as if it had occurred on January 1, 2016 and (ii) the Netsmart and HealthMEDX acquisitions as if they had occurred onJanuary 1, 2015, by applying pro forma adjustments attributable to these acquisitions to our historical financial results.The supplemental pro forma results below were calculated after applying our accounting policies and adjusting the results of Netsmart andHealthMEDX to reflect (i) the additional depreciation and amortization that would have been charged resulting from the fair value adjustments to property,plant and equipment and intangible assets, (ii) the additional interest expense associated with Netsmart’s borrowings under the new term loans, and (iii) theadditional amortization of the estimated adjustment to decrease the assumed deferred revenue obligations to fair value that would have been chargedassuming both acquisitions occurred on January 1, 2015, together with the consequential tax effects. Supplemental pro forma results for the year endedDecember 31, 2016 were also adjusted to exclude acquisition-related and transaction costs incurred during this period. The supplemental pro forma results forthe year ended December 31, 2016 exclude expenses incurred by Netsmart immediately prior to the Netsmart Transaction related to the accelerated pay-out ofoutstanding equity awards and the payment of seller costs. The effects of transactions between Allscripts and Netsmart during the periods presented havebeen eliminated in the supplemental pro forma data.The revenue and earnings of Netsmart, since April 19, 2016, and HealthMEDX, since October 27, 2016, are included in our consolidated statement ofoperations for the years ended December 31, 2016 and 2017, and the supplemental pro forma revenue and net loss of the combined entity is presented as ifthe acquisitions of both entities had occurred on January 1, 2015. The revenue and earnings of the NantHealth provider and patient engagement solutionsbusiness, since August 25, 2017, and the EIS Business, since October 2, 2017, are included in our consolidated statement of operations for the year endedDecember 31, 2017 and the supplemental pro forma revenue and net loss of the combined entity is presented as if the acquisitions of both entities hadoccurred on January 1, 2016. 91 (Unaudited)Year Ended December 31, (In thousands, except per share amounts) 2017 2016 Actual from Netsmart since acquisition date of April 19, 2016: Revenue $0 $173,361 Net loss $0 $(27,709) Actual from HealthMEDX since acquisition date of October 27, 2016: Revenue $0 $4,725 Net income $0 $602 Actual from NantHealth since acquisition date of August 25, 2017: Revenue $6,268 $0 Net loss $(4,393) $0 Actual from EIS Business since acquisition date of October 2, 2017: (1) Revenue $77,046 $0 Net loss $(15,160) $0 Supplemental pro forma data for combined entity: Revenue $2,113,761 $2,002,253 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders $(192,653) $(477,744)Loss per share, basic and diluted $(1.07) $(2.57)______________________(1)Revenue and Net loss from the EIS Business excludes revenue and income from discontinued operations. Refer to Note 13, “DiscontinuedOperations”.Other Acquisitions and InvestmentsOn December 2, 2016, we acquired a 100% interest in a third party based in Australia for an aggregate consideration of $5.1 million, net of cashacquired. The acquisition will broaden our clinical solutions portfolio. The financial results of this third party were consolidated with our financial resultsstarting on the date of the transaction. The allocation of the estimated fair value of the aggregate consideration is as follows: $2.9 million of goodwill; $3.4million of intangible assets related to customer relationships, $0.6 million of intangible assets related to technology; $1.2 million of deferred tax liabilities;and $0.6 million of net working capital and deferred revenue. The goodwill is not deductible for tax purposes. The acquired intangible assets relating totechnology and customer relationships will be amortized on a straight-line basis over estimated lives of 8 years. The aggregate consideration included acontingent consideration payable to the third-party owners of up to $2.5 million based on the achievement of certain profitability targets by 2018 and 2019.The fair value of $2.0 million accrued at December 31, 2016 was calculated based on probability-weighted simulations of potential target achievements. Allamounts are based on the exchange rate between the United States dollar and the Australian dollar as of December 31, 2016. The results of operations of thisthird party were not material to our consolidated results of operations for the year ended December 31, 2016.On October 14, 2016, we acquired a 100% interest in a third party for an aggregate consideration $24.0 million, net of cash acquired. The acquisitionwill broaden our population health solutions portfolio. The financial results of this third party were consolidated with our financial results starting on thedate of the transaction. The allocation of the aggregate consideration is as follows: $16.2 million of goodwill; $11.5 million of intangibles assets related totechnology, $0.2 million of intangible assets related to customer relationships; $3.7 million of deferred tax liabilities and $0.2 million of net working capitaland deferred revenue. The goodwill is not deductible for tax purposes. The acquired intangible assets relating to technology and customer relationships willbe amortized on a straight-line basis over estimated lives of 8 years. The results of operations of this third party were not material to our consolidated resultsof operations for the year ended December 31, 2016. 92 On September 8, 2016, we acquired a 51% interest in a third party for $29.7 million, net of cash acquired. This acquisition broadens our financialanalytics solutions portfolio. The financial results of this third party were consolidated with our financial results starting on the date of the transaction andwere not material to our consolidated results of operations for the year ended December 31, 2016. The allocation of the fair value of the considerationtransferred is as follows: $46.2 million in goodwill; $8.3 million intangible assets related to customer relationships, $10.3 million of intangible assets relatedto technology; $1.6 million related to tradename; $5.9 million of accounts receivable and other current assets; $0.6 million of deferred tax assets; $1.5million of fixed assets; $6.0 million of accounts payable, deferred revenue and accruals; $8.5 million of deferred tax liabilities; $0.8 million of other long-term liabilities, and $29.4 million of non-controlling interest. The value of the non-controlling interest was based on its proportionate share of the impliedtotal enterprise value of the third party at the time of the transaction. The goodwill is not deductible for tax purposes. The acquired intangible assets relatingto technology, customer relationships and tradename will be amortized on a straight-line basis over estimated lives of 10 years, 13 years and 10 years,respectively. During the three months ended December 31, 2016, we recorded several measurement period adjustments, which included $1.2 million decreasein the value of customer relationship intangibles, $0.2 million decrease in deferred tax liability and $1.0 million increase in the residual allocation togoodwill. As part of this acquisition, Allscripts also obtained a call option to purchase all, but not less than all, of the remaining 49% equity share of the thirdparty after the second and third anniversaries of the transaction date at pre-defined future enterprise values of the third party. Additionally, as part of thisacquisition, the minority owners of the third party were granted a call option to repurchase the 51% equity share owned by Allscripts at the same pre-definedfuture enterprise value applicable to Allscripts call option for a period of 9 months after the third anniversary of the transaction date. Such call option canonly be exercised in the event that Allscripts chooses not to exercise its call option after the third anniversary of the transaction date.On April 17, 2015, we acquired a majority interest in a third party for $11.1 million and provided a loan to the third party of $9.3 million to refinanceits outstanding indebtedness. The financial results of this third party were consolidated with our financial results starting on the date of the transaction, with aproportionate share allocated to non-controlling interest. The allocations of the estimated fair value of the net assets of the third party to goodwill,intangibles and non-controlling interest were $22.3 million, $4.3 million and $11.0 million, respectively. The value of the non-controlling interest was basedon its proportionate share of the implied total enterprise value of the third party at the time of the transaction. The goodwill is not deductible for tax purposes.The results of operations of this third party were not material to our consolidated results of operations for the year ended December 31, 2015.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, except # of investees) at December 31, 2017 Investment December 31, 2017 December 31, 2016 Equity method investments (1) 3 $1,658 $3,258 $2,436 Cost method investments 7 32,784 26,755 26,041 Total equity investments 10 $34,442 $30,013 $28,477 (1)Allscripts share of the earnings of our equity method investees is reported based on a one quarter lag. During 2016, we acquired a $1.0 million non-marketable convertible note of a third party with which we have an existing license and distributionagreement. This investment is accounted for under the cost method. The carrying value of the convertible note was $1.0 million and was included in otherassets in the accompanying consolidated balance sheets as of December 31, 2017 and December 31, 2016. During 2017, we acquired a $2.6 million non-marketable convertible note of a third party with which we have an existing investment accounted for under the equity method. The carrying value of theconvertible note was $2.6 million and was included in other assets in the accompanying consolidated balance sheet as of December 31, 2017.During 2016, we also acquired certain non-marketable equity securities of two third parties and entered into new commercial agreements with each ofthose third parties to license and distribute their products and services, for a total consideration of $10.2 million. Both of these equity investments areaccounted for under the cost method. The carrying value of these investments was $10.2 million and is included in other assets in the accompanyingconsolidated balance sheets as of December 31, 2017 and December 31, 2016. During 2017, we acquired certain non-marketable equity securities of twothird parties and entered into new commercial agreements with one of these third parties to license and distribute their products and services, for a totalconsideration of $2.8 million. Both of these investments are accounted for under the cost method. The carrying value of these investments was $2.8 millionand is included in other assets in the accompanying consolidated balance sheet as of December 31, 2017.As of December 31, 2017, it is not practicable to estimate the fair value of our equity investments primarily because of their illiquidity and restrictedmarketability. The factors we considered in trying to determine fair value include, but are not limited to, available financial information, the issuer’s abilityto meet its current obligations and the issuer’s subsequent or planned raises of capital.Impairment of and Losses on Long-term Investments 93 Each quarter, management performs an assessment of each of our investments on an individual basis to determine if any declines in fair value areother-than-temporary. Based on management's assessment during the second quarter of 2017, the Company determined that the decline in fair value of ouravailable for sale marketable securities was other-than-temporary based on a number of factors, including, but not limited to, uncertainty regarding our intentto hold these investments for a period of time that would be sufficient to recover our cost basis in the event of a market recovery, the fact that the fair value ofeach investment had continued to decline below cost over the period held, and the Company's uncertainty around the near-term prospects for certain of theinvestments. As a result, the Company recognized other-than-temporary impairment charges of $142.2 million on available for sale marketable securitiesduring the second quarter of 2017. The cost basis of these marketable securities prior to recognizing the impairment charges was approximately$205.6 million. The Company determined the fair value of these securities based on Level 1 inputs. During the three months ended September 30, 2017, theCompany recognized an additional $20.7 million loss upon the final disposition of these securities in connection with the NantHealth provider/patientsolutions business acquisition. In addition, the Company recognized other-than-temporary impairment charges of $2.1 million on a cost method equityinvestment during the nine months ended September 30, 2017. The aggregate carrying value of this equity investment prior to recognizing the impairmentcharge was $2.1 million. These impairment charges are included in impairment of and losses on long-term investments line in our consolidated statement ofoperations for the year ended December 31, 2017. 3. Fixed AssetsFixed assets consist of the following: Estimated December 31, December 31, (Dollar amounts in thousands) Useful Life 2017 2016 Computer equipment and software 3 to 10 years $332,640 $336,784 Facility furniture, fixtures and equipment 5 to 7 years 28,705 23,398 Leasehold improvements Shorter of 7 years or life of lease 37,735 36,600 Assets under capital lease 3 to 5 years 28,132 23,204 Fixed assets, gross 427,212 419,986 Less: Accumulated depreciation and amortization (261,609) (271,176)Fixed assets, net $165,603 $148,810 Accumulated amortization for assets under capital lease amounted to $13.7 million and $5.6 million as of December 31, 2017 and 2016, respectively. Fixed assets depreciation and amortization expense were as follows: Year Ended December 31, (In thousands) 2017 2016 2015 Fixed assets depreciation and amortization expense, including capital leases $52,152 $40,315 $42,153 94 4. Goodwill and Intangible AssetsGoodwill and intangible assets consist of the following: December 31, 2017 December 31, 2016 Gross Gross Carrying Accumulated Intangible Carrying Accumulated Intangible (In thousands) Amount Amortization Assets, Net Amount Amortization Assets, Net Intangibles subject to amortization: Proprietary technology $695,354 $(405,114) $290,240 $627,819 $(347,477) $280,342 Customer contracts and relationships 922,492 (464,860) 457,632 813,021 (430,960) 382,061 Total $1,617,846 $(869,974) $747,872 $1,440,840 $(778,437) $662,403 Intangibles not subject to amortization: Registered trademarks $79,000 $79,000 Goodwill 2,004,953 1,924,052 Total $2,083,953 $2,003,052 We performed our annual impairment tests of our reporting units as of October 1, 2017. During the year ended December 31, 2017, the annualimpairment testing date of the Netsmart reporting unit was changed to October 1, 2017 to coincide with Allscripts annual testing date. The prior annualimpairment testing date for the Netsmart unit was December 31, 2016. The fair value of each reporting unit substantially exceeded its carrying value and noindicators of impairment were identified. All of the impairment tests performed during 2017 consisted of quantitative analyses.We determined the fair value of each of our reporting units using both a discounted cash flow analysis and a market approach considering benchmarkcompany market multiples. A discount rate of 9% was applied to the cash flows used in the discounted cash flow analysis. We also considered our marketcapitalization as of the date of each test.There were no accumulated impairment losses associated with our goodwill as of December 31, 2017 or 2016, and no impairments were recordedduring the years ended December 31, 2017, 2016 and 2015. Changes in the carrying amounts of goodwill by reportable segment for the years endedDecember 31, 2017 and 2016 were as follows: Clinical and Population (In thousands) Financial Solutions Health Netsmart Total Balance as of December 31, 2015 $796,367 $426,234 $0 $1,222,601 Additions arising from business acquisitions: Netsmart 0 0 619,283 619,283 HealthMEDX 0 0 18,457 18,457 Other additions 49,093 16,241 0 65,334 Total additions to goodwill 49,093 16,241 637,740 703,074 Reallocation 0 (37,600) 37,600 0 Foreign exchange translation (1,623) 0 0 (1,623)Balance as of December 31, 2016 $843,837 $404,875 $675,340 $1,924,052 Additions arising from business acquisitions: DeVero acquisition 0 0 32,363 32,363 Nanthealth provider/patient solutions business 0 13,350 0 13,350 Enterprise Information Solutions business 16,367 12,860 0 29,227 Other additions 420 47 4,503 4,970 Total additions to goodwill 16,787 26,257 36,866 79,910 Foreign exchange translation 991 0 0 991 Balance as of December 31, 2017 $861,615 $431,132 $712,206 $2,004,953Other additions during the years ended December 31, 2017 and 2016 relate to goodwill arising from our acquisition of several third parties in late2016, including measurement period adjustments, and Netsmart’s Asset Purchase Agreement with a third party during March 2017. The goodwillreallocation during the year ended December 31, 2016 relates to the allocation of goodwill 95 associated with our HomecareTM business during the second quarter of 2016 as a result of the Netsmart Transaction. Refer to Note 2, “BusinessCombinations and Other Investments,” for additional information regarding these acquisitions. Intangible assets are being amortized over their estimated useful lives and amortization expense related to intangible assets was as follows: Year Ended December 31, (In thousands) 2017 2016 2015 Proprietary technology amortization included in cost of revenue $57,517 $45,357 $35,144 Intangible amortization included in operating expenses 33,754 25,847 23,172 Total intangible amortization expense $91,271 $71,204 $58,316The increase in amortization expense for the year ended December 31, 2017 compared with the year ended December 31, 2016 was primarily drivenby acquisitions completed during 2017. The increase in amortization expense for the year ended December 31, 2016 compared with the year ended December31, 2015 was primarily driven by acquisitions completed during 2016, partly offset by amortization associated with intangible assets that were fullyamortized in the second half of 2015. Estimated future amortization expense for the intangible assets that exist as of December 31, 2017, based on foreigncurrency exchange rates in effect as of such date, is as follows: Year Ended December 31, (In thousands) 2018 $106,859 2019 105,191 2020 100,509 2021 91,428 2022 79,315 Thereafter 264,570 Total $747,872 5. Asset Impairment ChargesDuring the year ended December 31, 2017, we recognized non-cash charges of $165.3 million including other-than-temporary impairment charges of$144.6 million during the second quarter of 2017 associated with two of the Company’s long-term investments based on management’s assessment of thelikelihood of near-term recovery of the investments’ value. The majority of the impairment charges relate to our investment in NantHealth common stock.During the three months ended September 30, 2017, we realized an additional $20.7 million loss upon the final disposition of the NantHealth common stockin connection with our acquisition of certain assets related to NantHealth’s provider/patient engagement solutions business. Refer to Note 2, “BusinessCombinations and Other Investments” and Note 10, “Accumulated Other Comprehensive Loss,” for further information regarding these impairments.During the year ended December 31, 2016, we incurred non-cash asset impairment charges totaling $4.7 million. These charges included $2.2 millionfor the impairment of capitalized software as a result of our decision to discontinue several software development projects, $2.1 million for the impairment ofone of our cost method equity investments, and other charges of $0.4 million to write down a long-term asset to its estimated net realizable value.During the year ended December 31, 2015, we recorded non-cash asset impairment charges of $1.2 million associated with a decline in the value of acommercial agreement and wrote-off $0.3 million of certain deferred costs that were determined to be unrealizable. Year Ended December 31, (In thousands) 2017 2016 2015 Asset impairment charges $0 $4,650 $1,544 Impairment of and losses on long-term investments $165,290 $0 $0 96 6. DebtDebt outstanding, excluding capital lease obligations, consisted of the following: December 31, 2017 December 31, 2016 (In thousands) PrincipalBalance UnamortizedDiscount andDebt IssuanceCosts Net CarryingAmount PrincipalBalance UnamortizedDiscount andDebt IssuanceCosts Net CarryingAmount 1.25% Cash Convertible Senior Notes $345,000 $35,978 $309,022 $345,000 $49,186 $295,814 Senior Secured Credit Facility 628,750 3,360 625,390 441,875 4,691 437,184 Netsmart Non-Recourse Debt: First Lien Term Loan 479,316 10,950 468,366 432,925 11,655 421,270 Second Lien Term Loan 167,000 7,418 159,582 167,000 8,901 158,099 Other debt 0 0 0 13 0 13 Total debt $1,620,066 $57,706 $1,562,360 $1,386,813 $74,433 $1,312,380 Less: Debt payable within one year - excluding Netsmart 28,125 438 27,687 15,638 480 15,158 Less: Debt payable within one year - Netsmart 4,866 2,111 2,755 4,351 1,900 2,451 Total long-term debt, less current maturities $1,587,075 $55,157 $1,531,918 $1,366,824 $72,053 $1,294,771Interest expense consisted of the following: Year Ended December 31, (In thousands) 2017 2016 2015 Interest expense $23,001 $15,556 $16,284 Amortization of discounts and debt issuance costs 14,539 13,922 13,679 Write off of unamortized deferred debt issuance costs 0 0 1,433 Netsmart: Interest expense (1) 46,449 30,820 0 Amortization of discounts and debt issuance costs 3,490 2,619 0 Write off of unamortized deferred debt issuance costs 0 5,224 0 Total interest expense $87,479 $68,141 $31,396 (1)Includes interest expense related to capital leases.Interest expense related to the 1.25% Cash Convertible Senior Notes was comprised of the following: Year Ended December 31, (In thousands) 2017 2016 2015 Coupon interest at 1.25% $4,312 $4,312 $4,312 Amortization of discounts and debt issuance costs 13,208 12,585 11,994 Total interest expense related to the 1.25% Notes $17,520 $16,897 $16,3061.25% Cash Convertible Senior Notes due 2020On June 18, 2013, we issued $345.0 million aggregate principal amount of the 1.25% Cash Convertible Senior Notes due 2020 (the “1.25% Notes”).The aggregate net proceeds of the 1.25% Notes were $305.1 million, after payment of the net cost of the 1.25% Notes Call Spread Overlay (as describedbelow) and transaction costs.Interest on the 1.25% Notes is payable semiannually in arrears on January 1 and July 1 of each year, at a fixed annual rate of 1.25% commencing onJanuary 1, 2014. The 1.25% Notes will mature on July 1, 2020 unless repurchased or converted in accordance with their terms prior to such date. 97 The 1.25% Notes are convertible only into cash, and not into shares of our common stock or any other securities. Holders may convert their 1.25%Notes solely into cash at their option at any time prior to the close of business on the business day immediately preceding January 1, 2020 only under thefollowing circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for atleast 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediatelypreceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day periodimmediately after any five consecutive trading day period in which the trading price per $1,000 principal amount of the 1.25% Notes for each trading day ofthe measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such tradingday; or (3) upon the occurrence of specified corporate events. On or after January 1, 2020 until the close of business on the second scheduled trading dayimmediately preceding the maturity date, holders may convert their 1.25% Notes solely into cash at any time, regardless of the foregoing circumstances.Upon conversion, in lieu of receiving shares of our common stock, a holder will receive an amount in cash, per $1,000 principal amount of the 1.25% Notes,equal to the settlement amount, determined in the manner set forth in the Indenture.The initial conversion rate will be 58.1869 shares of our common stock per $1,000 principal amount of the 1.25% Notes (equivalent to an initialconversion price of approximately $17.19 per share of common stock). The conversion rate will be subject to adjustment in some events but will not beadjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, we will pay a cash make-whole premium by increasing the conversion rate for a holder who elects to convert such holder’s 1.25% Notes in connection with such a corporate event incertain circumstances. We may not redeem the 1.25% Notes prior to the maturity date, and no sinking fund is provided for the 1.25% Notes.If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or part of their 1.25% Notes at arepurchase price equal to 100% of the principal amount of the 1.25% Notes to be repurchased, plus accrued and unpaid interest to, but excluding, thefundamental change repurchase date. The Indenture provides for customary events of default, including cross acceleration to certain other indebtedness ofours, and our subsidiaries.The 1.25% Notes are senior unsecured obligations, and rank senior in right of payment to any of our indebtedness that is expressly subordinated inright of payment to the 1.25% Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right ofpayment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness andother liabilities (including trade payables) of our subsidiaries.The 1.25% Notes contain an embedded cash conversion option. We have determined that the embedded cash conversion option is a derivativefinancial instrument, required to be separated from the 1.25% Notes and accounted for separately as a derivative liability, with changes in fair value reportedin our consolidated statements of operations until the cash conversion option transaction settles or expires. The initial fair value liability of the embeddedcash conversion option was $82.8 million, which simultaneously reduced the carrying value of the 1.25% Notes (effectively an original issuance discount).For further discussion of the derivative financial instruments relating to the 1.25% Notes, refer to Note 11, “Derivative Financial Instruments.”The reduced carrying value of the 1.25% Notes resulted in a debt discount that is amortized to the 1.25% Notes’ principal amount through therecognition of non-cash interest expense over the expected term of the 1.25% Notes, which extends through their maturity date of July 1, 2020. This hasresulted in our recognition of interest expense on the 1.25% Notes at an effective rate approximating what we would have incurred had nonconvertible debtwith otherwise similar terms been issued. The effective interest rate of the 1.25% Notes at issuance was 5.4%, which was imputed based on the amortization ofthe fair value of the embedded cash conversion option over the remaining term of the 1.25% Notes. As of December 31, 2017, we expect the 1.25% Notes tobe outstanding until their July 1, 2020 maturity date, for a remaining amortization period of approximately two and a half years. As of December 31, 2017,the if-converted value of the 1.25% Notes did not exceed the 1.25% Notes’ principal amount.In connection with the settlement of the 1.25% Notes, we paid $8.4 million in transaction costs. Such costs have been allocated to the 1.25% Notes,the 1.25% Call Option (as defined below) and the 1.25% Warrants (as defined below). The amount allocated to the 1.25% Notes, or $8.3 million, wascapitalized and is being amortized over the expected term of the 1.25% Notes. The remaining aggregate amounts allocated to the 1.25% Call Option and1.25% Warrants were not significant. The outstanding capitalized amount of transaction costs related to the 1.25% Notes was $2.9 million and is reported as areduction of long-term debt on our consolidated balance sheet as of December 31, 2017.Accrued and unpaid interest on the 1.25% Notes of $2.2 million is included in accrued expenses in the accompanying consolidated balance sheet asof December 31, 2017. 98 1.25% Notes Call Spread OverlayAlso in June 2013, concurrent with the issuance of the 1.25% Notes, we entered into privately negotiated hedge transactions (collectively, the “1.25%Call Option”) and warrant transactions (collectively, the “1.25% Warrants”), with certain of the initial purchasers of the 1.25% Notes (collectively, the “CallSpread Overlay”). Assuming full performance by the counterparties, the 1.25% Call Option is intended to offset cash payments in excess of the principalamount due upon any conversion of the 1.25% Notes. We used $82.8 million of the proceeds from the settlement of the 1.25% Notes to pay for the 1.25%Call Option, and simultaneously received $51.2 million from the sale of the 1.25% Warrants, for a net cash outlay of $31.6 million for the Call SpreadOverlay. The 1.25% Call Option is a derivative financial instrument and is discussed further in Note 11, “Derivative Financial Instruments.” The 1.25%Warrants are equity instruments and are further discussed in Note 9, “Stockholders’ Equity.”Senior Secured Credit Facility AmendmentOn September 30, 2015, we entered into a Replacement Facility Amendment (the “2015 Credit Agreement”) to our existing Credit Agreement, datedas of June 28, 2013, as amended on June 8, 2015, with a syndicate of financial institutions and JPMorgan Chase Bank, N.A., as administrative agent. The2015 Credit Agreement provides for a $250 million senior secured term loan (the “Term Loan”) and a $550 million senior secured revolving facility (the“Revolving Facility”), each with a five year term (collectively the “Senior Secured Credit Facility”). These amounts represent increases in total borrowinglimits of $25 million and $125 million, respectively, compared with our existing Credit Agreement. The Term Loan is repayable in quarterly installments,which commenced on December 31, 2015 and end on September 30, 2020. A total of up to $50 million of the Revolving Facility is available for the issuanceof letters of credit, up to $10 million of the Revolving Facility is available for swingline loans, and up to $100 million of the Revolving Facility could beborrowed under certain foreign currencies.Proceeds from the borrowings under the 2015 Credit Agreement were used for the refinancing of the term loan and revolving facility under ourexisting Credit Agreement. The proceeds of the Revolving Facility can be used to finance our working capital needs and for general corporate purposes,including financing of permitted acquisitions, share repurchases, and other investments. We may also request to add one or more incremental revolvingand/or term loan facilities in an aggregate amount of up to $300 million, subject to certain conditions.Borrowings under the Senior Secured Credit Facility bear interest, at our option, at a rate per annum equal to either (1) the rate (adjusted for statutoryreserve requirements for eurocurrency liabilities and mandatory costs, if any) for deposits in the applicable currency for a period equal to one, two, three or sixmonths or, with respect to loans under the Revolving Facility denominated in United States dollars, subject to availability to all affected lenders, 7 days (asselected by us), appearing on pages LIBOR01, LIBOR02, EURIBOR01, as applicable, or other page displaying such rate for such currency of the ReutersScreen (the “Eurocurrency Rate”) plus the applicable margin or (2) the highest of (a) the rate of interest publicly announced by JPMorgan Chase Bank, N.A.as its prime rate in effect at its principal office in New York City, (b) the federal funds effective rate from time to time plus 0.5%, and (c) the EurocurrencyRate for United States dollars for a one month interest period plus 1.0% (the “Base Rate”), plus, in each case, the applicable margin. The initial applicableinterest rate margin for Base Rate borrowings was 1.25%, and for Eurocurrency Rate borrowings was 2.25%. Future applicable interest rate margins will bedetermined from a pricing table and will depend upon our total leverage ratio. The applicable interest rate margins under the 2015 Credit Agreement for BaseRate borrowings range from 0.00% to 1.25% and for Eurocurrency Rate loans range from 1.00% to 2.25%. These ranges are 50 basis points lower at eachlevel of the leverage-based pricing grid compared with our existing Credit Agreement.Subject to certain agreed upon exceptions, all obligations under the Senior Secured Credit Facility remain guaranteed by each of our existing andfuture direct and indirect material domestic subsidiaries other than Coniston Exchange LLC and certain domestic subsidiaries owned by our foreignsubsidiaries (the “Guarantors”) pursuant to a related Guarantee and Collateral Agreement, dated as of June 28, 2013, among Allscripts Healthcare Solutions,Inc., Allscripts Healthcare, LLC, certain of our other subsidiaries, and JPMorgan Chase Bank, N.A., as administrative agent. Our obligations under the SeniorSecured Credit Facility, any swap agreements and any cash management arrangements provided by any lender, remain secured, subject to permitted liens andother agreed upon exceptions, by a perfected first priority security interest in all of the tangible and intangible assets (including, without limitation,intellectual property, material owned real property and all of the capital stock of each Guarantor and, in the case of foreign subsidiaries, up to 65% of thecapital stock of first tier material foreign subsidiaries) of Allscripts Healthcare Solutions, Inc. and certain of our subsidiary guarantors. 99 The Senior Secured Credit Facility requires us to maintain a minimum interest coverage ratio of 4.0 to 1.0, a maximum total leverage ratio of 4.0 to 1.0and a maximum senior secured leverage ratio of 3.0 to 1.0. The minimum interest coverage ratio is calculated by dividing earnings before interest expense,income tax expense, depreciation and amortization expense by cash interest expense, subject to various agreed upon adjustments. The total leverage ratio iscalculated by dividing total indebtedness by earnings before interest expense, income tax expense, depreciation and amortization expense, subject to variousagreed upon adjustments. The senior secured leverage ratio is calculated by dividing senior secured indebtedness by earnings before interest expense, incometax expense, depreciation and amortization expense, subject to various agreed upon adjustments. The 2015 Credit Agreement also provides that during thefour-quarter period following permitted acquisitions that are financed in whole or in part with indebtedness and the consideration paid by us is $100 millionor more, we are required to maintain a maximum total leverage ratio of 4.5 to 1.0 and a maximum senior secured leverage ratio of 3.25 to 1.0. In addition, the2015 Credit Agreement requires mandatory prepayments of the debt outstanding under the Senior Secured Credit Facility in certain specific circumstances,and contains a number of covenants which, among other things, restrict our ability to incur additional indebtedness, engage in mergers, or declare dividendsor other payments in respect of our capital stock.The Senior Secured Credit Facility also contains certain customary events of default, including relating to non-payment, breach of covenants, cross-default, bankruptcy and change of control.In connection with our entry into the 2015 Credit Agreement, during the year ended December 31, 2015, we incurred fees and other costs totaling $3.0million, of which $2.7 million were capitalized and included in the net carrying amounts outstanding under the Senior Secured Credit Facility as ofDecember 31, 2015. In addition, $3.3 million of deferred costs associated with our existing Credit Facility carried over to the 2015 Credit Agreement. Also, inconnection with our entry into the 2015 Credit Agreement, $1.1 million of deferred costs associated with our existing Credit Agreement and $0.3 million offees and other costs associated with the 2015 Credit Agreement were written off to interest expense and are included in other losses, net in the accompanyingconsolidated statement of cash flows for the year ended December 31, 2015.As of December 31, 2017, $218.8 million under the Term Loan, $410.0 million under the Revolving Facility, and $0.8 million in letters of credit wereoutstanding under the 2015 Credit Agreement.As of December 31, 2017, the interest rate on the Senior Secured Credit Facility was LIBOR plus 2.25%, which totaled 3.82%. We were in compliancewith all financial covenants under the 2015 Credit Agreement as of December 31, 2017.As of December 31, 2017, we had $139.2 million available borrowing capacity, net of outstanding letters of credit, under the Revolving Facility.There can be no assurance that we will be able to draw on the full available balance of the Revolving Facility if the financial institutions that have extendedsuch credit commitments become unwilling or unable to fund such borrowings.Subsequent to December 31, 2017, we amended and restated our Senior Secured Credit Facility on February 15, 2018. The Second Amended andRestated Credit Agreement provides for a $400 million senior secured term loan and a $900 million senior secured revolving facility, which representincreases from the $250 million term loan and $550 million revolving facility provided under our existing 2015 Credit Agreement, respectively, each with afive-year term. Refer to Note 19, “Subsequent Events,” for further information regarding the Second Amended and Restated Credit Agreement.Netsmart Non-Recourse DebtOn April 19, 2016, Netsmart entered into a First and Second Lien Credit Agreement (the “Netsmart First Lien Credit Agreement” and the “NetsmartSecond Lien Credit Agreement”, respectively), with a syndicate of financial institutions and UBS AG, Stamford Branch, as administrative agent. TheNetsmart First Lien Credit Agreement provides for a $395 million senior secured 7‑year term loan credit facility (the “Netsmart First Lien Term Loan”) and a$50 million senior secured 5-year revolving loan credit facility (the “Netsmart Revolving Facility”). The Netsmart Second Lien Credit Agreement providesfor a $167 million senior secured 7.5-year term loan credit facility (the “Netsmart Second Lien Term Loan,” and, together with the Netsmart First Lien CreditAgreement, the “Netsmart Credit Agreements”). Each of Netsmart’s obligations under the Netsmart Credit Agreements are guaranteed by Netsmart’s wholly-owned subsidiaries, under an unconditional guaranty. Netsmart’s debt under the Netsmart Credit Agreements is non-recourse to Allscripts and its wholly-owned subsidiaries. In connection with the Netsmart Credit Agreements, during the second quarter of 2016, Netsmart incurred fees and other costs totaling$27.9 million, which were capitalized and included in the net borrowings outstanding under Netsmart’s Credit Agreements as of December 31, 2016.On October 27, 2016, Netsmart signed a definitive agreement to acquire HealthMEDX, LLC. The acquisition agreement resulted in Netsmart issuingadditional first lien debt under the new facility of $40 million. In connection with this additional first lien debt, Netsmart incurred debt issuance costs of $0.6million.On November 10, 2016, Netsmart amended its First Lien Credit Agreement to reduce the effective interest rate by 25 basis points. No other terms orconditions were impacted by this amendment. The Netsmart Revolving Facility and the Netsmart Second 100 Lien Term Loan were not impacted by the amendment. There were no debt issuance costs associated with the amendment. Debt issuance costs of $5.2 millionwere written off to interest expense in connection with this amendment due to the changes in members of the lending bank syndicate.On July 17, 2017, Netsmart signed a definitive agreement to acquire DeVero. The acquisition agreement resulted in Netsmart issuing additional firstlien debt under the new facility of $51 million. In connection with this additional first lien debt, Netsmart incurred debt issuance costs of $1.3 million.The Netsmart Revolving Facility will terminate on April 19, 2021 and the Netsmart First Lien Term Loan matures on April 19, 2023. The NetsmartSecond Lien Term Loan matures on October 19, 2023. All unpaid principal of, and interest accrued on, such loans must be repaid on their respective maturitydates. The outstanding principal amount of the Netsmart First Lien Term Loan bears interest at a rate equal to (a) with respect to LIBO Rate Loans, AdjustedLIBO Rate plus 4.50% and (b) with respect to ABR Loans, 3.50%. The outstanding principal amount of the Netsmart Revolving Facility bears interest at arate equal to (a) with respect to LIBO Rate Loans, Adjusted LIBO Rate plus 4.75% and (b) with respect to ABR Loans, 3.75% (provided, however, such ratemay step-down to 4.25% and 3.25%, respectively, depending on the then-applicable leverage ratio). The outstanding principal amount of the NetsmartSecond Lien Term Loan bears interest at a rate equal to (a) with respect to LIBO Rate Loans, Adjusted LIBO Rate plus 9.50% and (b) with respect to ABRLoans, 8.50%. The proceeds from the funding of the Netsmart Credit Agreements were used to, among other things, finance a portion of the Netsmartaggregate consideration and to pay fees and expenses in connection therewith.The Netsmart Credit Agreements contain a financial covenant that Intermediate and its subsidiaries maintain a maximum ratio of total debt toConsolidated Adjusted EBITDA. The entire principal amount of the Netsmart Credit Agreements and any accrued but unpaid interest may be declaredimmediately due and payable if an event of default occurs. Events of default under the Netsmart Credit Agreements include (but are not limited to) failure tomake payments when due, a default in the performance of any covenants in the Netsmart Credit Agreements or related documents or certain changes ofcontrol of Intermediate and/or of Netsmart.The Netsmart First Lien Credit Agreement requires Netsmart to maintain a total net leverage ratio of not more than 7.50 to 1.00 at December 31, 2017,with gradual step‑downs to 6.75 to 1.00 for the quarter ending March 31, 2019 and each three-month period ending thereafter. The Netsmart Second LienCredit Agreement requires Netsmart to maintain a total net leverage ratio of not more than 8.50 to 1.00 at December 31, 2017, with gradual step‑downs to7.75 to 1.00 for the quarter ending March 31, 2019 and each three-month period ending thereafter. Netsmart was in compliance with all covenants under itsCredit Agreements as of December 31, 2017.As of December 31, 2017, $479.3 million under the Netsmart First Lien Term Loan and $167.0 million under the Netsmart Second Lien Term Loanwere outstanding.As of December 31, 2017 and 2016, the interest rate on the borrowings under the Netsmart First Lien Term Loan was Adjusted LIBO plus 4.50%,which totaled 6.19% and 5.50%, respectively. The interest rate applicable to the Netsmart Revolving Facility was Adjusted LIBO plus 4.75%, which totaled6.44% as of December 31, 2017, however, there have been no borrowings under the Netsmart Revolving Facility since its inception. As of December 31,2017 and 2016, the interest rate on the borrowings under the Netsmart Second Lien Term Loan was Adjusted LIBO plus 9.5%, which totaled 10.98% and10.5%, respectively.As of December 31, 2017, Netsmart had $50.0 million available borrowing capacity, net of outstanding letters of credit, under the NetsmartRevolving Facility. Additional amounts of up to $200.2 million as of December 31, 2017 are available under Netsmart’s Credit Agreements based uponNetsmart’s net leverage ratio at the time of the request. There can be no assurance that Netsmart will be able to draw on the full available balance of theNetsmart Revolving Facility if the financial institutions that have extended such credit commitments become unwilling or unable to fund such borrowings.The following table summarizes future debt payments as of December 31, 2017: (In thousands) Total 2018 2019 2020 2021 2022 Thereafter 1.25% Cash Convertible Senior Notes (1) $345,000 $0 $0 $345,000 $0 $0 $0 Term Loan 218,750 28,125 40,625 150,000 0 0 0 Revolving Facility (2) 410,000 0 0 410,000 0 0 0 Netsmart Non-Recourse Debt (2) First Lien Term Loan (3) 479,316 4,866 4,866 4,866 4,866 4,866 454,986 Second Lien Term Loan 167,000 0 0 0 0 0 167,000 Total debt $1,620,066 $32,991 $45,491 $909,866 $4,866 $4,866 $621,986 (1)Assumes no cash conversions of the 1.25% Notes prior to their maturity on July 1, 2020. (2)Assumes no additional borrowings after December 31, 2017 and that all drawn amounts are repaid upon maturity. 101 (3)Starting with the year ended December 31, 2017, additional amounts may be due within 125 days after year-end if Netsmart has “excess cash” asdefined in the Netsmart First Lien Credit Agreement. For the year ended December 31, 2017, no additional amounts will be due as a result of thisprovision. 7. Income TaxesThe following is a geographic breakdown of income (loss) before income tax benefits: Year Ended December 31, (In thousands) 2017 2016 2015 United States $(209,634) $(13,317) $(5,357)Foreign 16 (1,467) 5,927 (Loss) income from continuing operations before income taxes $(209,618) $(14,784) $570 The following is a summary of the components of the provision (benefit) for income taxes: Year Ended December 31, (In thousands) 2017 2016 2016 Current tax provision Federal $407 $323 $570 State 1,770 606 658 Foreign 5,091 3,857 4,083 7,268 4,786 5,311 Deferred tax provision Federal (39,237) (18,369) (2,928)State (15,885) (3,354) 898 Foreign (2,913) (877) (655) (58,035) (22,600) (2,685)Income tax (benefit) provision $(50,767) $(17,814) $2,626 102 Taxes computed at the statutory federal income tax rate of 35% are reconciled to the provision for income taxes as follows: Year Ended December 31, (In thousands) 2017 2016 2015 United States federal tax at statutory rate $(73,171) $(4,714) $200 Items affecting federal income tax rate Non-deductible acquisition and reorganization expenses 169 1,400 (2)Research credits (4,476) (3,360) (3,000)Change in unrecognized tax benefits 686 (545) (208)State income taxes, net of federal benefit (9,244) (371) 182 Compensation 2,950 651 765 Meals and entertainment 1,358 1,341 1,023 Impact of foreign operations 730 2,847 1,848 Provision-to-Return adjustments (1,413) (1,116) (136)Settlements with taxing authorities 0 0 (4,218)Deemed Dividends 1,289 887 1,408 Dividends Accrued 0 2,198 1,190 Federal, state and local rate changes 185 344 1,104 US Tax reform impact (26,016) 0 0 One time Mandatory Repatriation Toll Charge 5,155 0 0 Bilateral Advance Pricing Agreement impact 0 0 524 Non-deductible items 64 70 (5)Valuation allowance 47,959 (17,504) 1,816 Other 3,008 58 135 Income tax provision (benefit) $(50,767) $(17,814) $2,626 Significant components of our deferred tax assets and liabilities consist of the following: December 31, (In thousands) 2017 2016 Deferred tax assets Accruals and reserves, net $26,126 $22,305 Allowance for doubtful accounts 7,741 12,386 Stock-based compensation, net 12,654 15,939 Deferred revenue 12,466 15,092 Net operating loss carryforwards 67,677 91,859 Capital loss carryforwards 42,702 0 Research and development tax credit 38,310 32,952 AMT credits 7,901 7,085 State tax credits 3,795 2,911 Other 11,106 15,065 Less: Valuation Allowance (79,732) (23,761)Total deferred tax assets 150,746 191,833 Deferred tax liabilities Prepaid expense (6,407) (9,532)Property and equipment, net (13,201) (15,879)Acquired intangibles, net (219,559) (305,361)Other (648) (22)Total deferred tax liabilities (239,815) (330,794)Net deferred tax liabilities $(89,069) $(138,961) 103 The deferred tax assets (liabilities) are classified in the consolidated balance sheets as follows: December 31, (In thousands) 2017 2016 Non-current deferred tax assets, net $4,574 $2,791 Non-current deferred tax liabilities, net (93,643) (141,752)Non-current deferred tax liabilities, net $(89,069) $(138,961)Allscripts Income TaxesThe United States Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 and introduced significant changes to the income tax lawin the United States. Effective in 2018, the Tax Act reduces the United States statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced earnings and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax,respectively. In addition, in 2017 we were subject to a one-time transition tax on accumulated foreign subsidiary earnings not previously subject to incometax in the United States.Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of theeffects and recorded provisional amounts in our financial statements for the year ended December 31, 2017 in accordance with guidance in Staff AccountingBulletin No. 118 which provided guidance for companies that had not completed their accounting for the income tax effects of the Tax Act in the period ofenactment and allowed for a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts. As ofDecember 31, 2017, we had not completed our accounting for the tax effects of the enactment of the Tax Act, however, we made a reasonable estimate of theeffects on our deferred tax balances and in relation to the transition tax. The remeasurement of our deferred tax balances to reflect the reduced federal rateresulted in tax expense of $10.2 million. In addition, we have estimated and recorded tax expense of $5.2 million in our tax provision for the year endedDecember 31, 2017 related to the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to income tax in the UnitedStates. The Tax Act creates new global intangible low-taxed income ("GILTI") tax provisions. The GILTI provisions require us to include in our future U.S.taxable income, the earnings of foreign subsidiaries in excess of an allowable return on the foreign subsidiaries' tangible assets. We have elected to accountfor GILTI tax in the period in which it is incurred, and therefore have not provided any deferred tax impacts of GILTI in our consolidated financial statementsfor the year ended December 30, 2017.As of December 31, 2017 and 2016, we had federal net operating loss (“NOL”) carryforwards of $179 million and $192 million, respectively. Thefederal NOL carryforward includes Israeli NOL carryovers of $61 million that do not expire. As of December 31, 2017 and 2016, we had state NOLcarryforwards of $4 million and $5 million, respectively. The NOL carryforwards expire in various amounts starting in 2020 for both federal and state taxpurposes. The utilization of the federal NOL carryforwards is subject to limitation under the rules regarding changes in stock ownership as determined by theInternal Revenue Code; however, we are not subject to any material limits at this point in time due to excess limitations in prior years.For federal purposes, 2013 to 2017 tax years remain subject to income tax examination by federal authorities. For our state tax jurisdictions, 2006 to2017 tax years remain open to income tax examination by state tax authorities. In Canada, the 2013 to 2017 tax years remain open for examination and inIndia the 2012 to 2017 tax years remain open.We have a subsidiary in India that is entitled to a tax holiday that allows for tax-free operations during such tax holiday. The tax holiday for thesubsidiary began to partially expire in 2012 and will fully expire in 2017. Tax savings realized from this holiday totaled $0.4 million, $0.7 million and $0.4million for the years ended December 31, 2017, 2016 and 2015, respectively, which reduced our diluted loss per share by less than $0.01 in each of thoseyears. There is a potential for a partial tax holiday for 5 years beginning on April 1, 2017, which is contingent upon a certain level of capital expenditurespending, among other conditions. At this time, we do not believe we have met the requirements for this holiday; therefore, no tax savings impact has beenrecorded for this potential tax holiday for the year ended December 31, 2017.U.S. GAAP principles prescribe a threshold of more-likely-than-not to be sustained upon examination for the financial statement recognition andmeasurement of a tax position taken or expected to be taken in a tax return. These principles also provide guidance on de-recognition, classification, interestand penalties, accounting in interim periods, disclosure and transition.Changes in the amounts of unrecognized tax benefits were as follows: 104 Year Ended December 31, (In thousands) 2017 2016 2015 Beginning balance as of January 1 $11,380 $11,777 $15,314 Increases for tax positions related to the current year 990 733 600 Decreases for tax positions related to prior years (205) (16) 0 Increases for tax positions related to prior years 153 104 50 Decreases relating to settlements with taxing authorities 0 0 (3,805)Increases acquired in business acquisitions 0 617 0 Foreign currency translation 10 (1) (24)Reductions due to lapsed statute of limitations (334) (1,834) (358)Ending balance as of December 31 $11,994 $11,380 $11,777 During the three months ended September 30, 2015, we concluded our Internal Revenue Service (the “IRS”) audit for all open years through December31, 2012. The conclusion of this audit provided us with confirmation about the NOL carryforwards actual balance as of December 31, 2012. As a result, werecognized certain unrecognized income tax benefits totaling $4.0 million during the three months ended September 30, 2015. The recognition of thesebenefits did not impact our effective tax rate due to the valuation allowance. We were not able to obtain confirmation regarding the actual balance of ourresearch and development credit carryforwards because none of these research and development credits have been utilized against any tax liability as of thedate of this Form 10-K. Therefore, our analysis of eligible research and development credit carryforwards remains unchanged.We had gross unrecognized tax benefits of $12.0 million and $11.4 million as of December 31, 2017 and 2016, respectively. If the current grossunrecognized tax benefits were recognized, the result would be an increase in our income tax benefit of $0.1 million and $1.0 million, respectively. Theseamounts are net of accrued interest and penalties relating to unrecognized tax benefits of $0.7 million and $1.2 million, respectively. We believe that it isreasonably possible that $1.0 million of our currently remaining unrecognized tax benefits may be recognized by the end of 2018, as a result of a lapse of theapplicable statute of limitations.We recognized interest and penalties related to uncertain tax positions in our consolidated statements of operations as follows: Year Ended December 31, (In thousands) 2017 2016 2015 Interest and penalties included in the provision for income taxes $446 $6 $103The amount of interest and penalties included in our consolidated balance sheets is as follows: December 31, (In thousands) 2017 2016 Interest and penalties included in the liability for uncertain tax positions $741 $1,187 During the year ended December 31, 2017, we recorded valuation allowance of $42.7 million related to federal capital loss carryforwards not expectedto be realized before expiration. In addition, we recorded valuation allowance of $5.3 million related to federal credit carryforwards, and foreign and stateNOL carryforwards. During the year ended December 31, 2016, we released valuation allowances of $17.5 million related to federal credit carryforwards, andforeign and state NOL carryforwards to offset current year taxable income. In evaluating our ability to recover our deferred tax assets within the jurisdictionfrom which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, tax-planningstrategies, and results of recent operations. In evaluating the objective evidence that historical results provide, we consider three years of cumulativeoperating income (loss). Using all available evidence, we determined that it was uncertain that we will realize the deferred tax asset for certain of thesecarryforwards within the carryforward period.Our effective rate was lower for the year ended December 31, 2017 as compared with the prior year, primarily due to the recording of valuationallowance of $48.0 million in the current year as compared with the release of valuation allowance of $17.5 million in the prior year.We file income tax returns in the United States federal jurisdiction, numerous states in the United States and multiple countries outside of the UnitedStates. We are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of theoutcomes of such matters could materially impact our consolidated financial statements. 105 Effective January 1, 2017, we adopted ASU 2016-09. The guidance in ASU 2016-09, among other things, requires all income tax effects of share-based awards to be recognized in the statement of operations when the awards vest or are settled as a discrete item in the period in which they occur. Duringthe year ended December 31, 2017, we recorded $2.1 million of tax expense for awards in which the compensation cost recorded was higher than the taxdeductions for the awards. ASU 2016-09 also requires entities to recognize excess tax benefits, regardless of whether the tax deduction reduces taxespayable. As part of adopting this new standard, we recorded a gross cumulative effect adjustment of $5.6 million to the opening balance of accumulateddeficit to create a deferred tax asset to recognize excess tax benefits not previously recorded. The net decrease to accumulated deficit was $1.8 million due tothe recognition of a corresponding valuation allowance of $3.8 million.We intend to indefinitely reinvest the undistributed earnings of our foreign subsidiaries as a general rule, as most of our foreign subsidiaries have thirdparty customers, as well as formal sales proposals that could require significant resources. Specifically, our subsidiary in India may repatriate all current 2017earnings at the discretion of management. Certain earnings of our Israel subsidiary may also be repatriated depending on resource needs of our growinginternational business. For this reason, all potential withholding taxes have been recorded for these possible exceptions to our general rule of indefinitelyreinvesting. As of December 31, 2016, we had established a Netherlands holding company, which currently holds all of our foreign subsidiaries. Our holdingcompany makes it more efficient for us to share resources between the respective foreign subsidiaries. As we have determined that the earnings of thesesubsidiaries are not required as a source of funding for our United States operations, such earnings are not planned to be distributed to the United States in theforeseeable futureDuring 2017, tax reform was enacted that requires a calculation of a “toll charge” for all company’s controlled foreign corporations. As of December31, 2017, we have estimated and recorded a liability for this tax of $5 million.Netsmart Income TaxesThe Company has both U.S. federal and state net operating losses which are carried forward 20 years for federal tax purposes and from 5 to 20 years forstate tax purposes. Both the federal and state loss carryovers are analyzed each year to determine the likelihood of realization. The United States federal losscarryover at December 31, 2017, was $91.4 million and if not used, would begin to expire in 2034. The state net operating loss was $120.0 million and if notused, would begin to expire in part beginning in 2018 through 2036. In addition, the Company has $10.7 million of federal and state tax credit carryoversconsisting of $0.4 million of federal Alternative Minimum Tax credits, $5.5 million of federal and state research and development tax credits which if notused, will begin to expire in 2028 and $4.8 million of Kansas High Performance Incentive Program credits which if not used, will begin to expire in 2027.Effective in 2018, the Tax Act reduces the United States statutory tax rate from 35% to 21%. As a result, Netsmart revalued its ending net deferred taxliabilities at December 31, 2017 and recognized a $36.2 million tax benefit in its statement of income for the year ended December 31, 2017.Netsmart files a U.S. consolidated return. The 2014 through 2017 tax returns of Netsmart, LLC remain subject to examination by the Internal RevenueService (IRS). The IRS examined the 2014 and 2015 federal income tax returns and closed the exams with no changes. The Company also files state taxreturns with varying statutes of limitations. The 2013 through 2017 state tax returns remain subject to examination by most state tax authorities.In assessing the realizability of its deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferredtax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company believesthat it is more likely than not that its deferred tax assets will be realized, except for certain state tax credits. As a result, the Company recorded a valuationallowance associated with its deferred tax assets of $0.1 million as of both December 31, 2017 and December 31, 2016, respectively. 106 8. Stock Award PlansTotal recognized stock-based compensation expense was as follows: Year Ended December 31, (In thousands) 2017 2016 2015 Cost of revenue: Software delivery, support and maintenance $2,944 $4,228 $4,224 Client services 4,537 4,493 4,508 Total cost of revenue 7,481 8,721 8,732 Selling, general and administrative expenses 25,547 27,256 20,069 Research and development 8,666 8,175 7,826 Total stock-based compensation expense $41,694 $44,152 $36,627The estimated income tax benefit of stock-based compensation expense included in the provision for income taxes for the year ended December 31,2017 is approximately $4.7 million. No stock-based compensation costs were capitalized during the years ended December 31, 2017, 2016 and 2015. Thecalculation of stock-based compensation expenses includes an estimate for forfeitures at the time of grant. This estimate can be revised, if necessary, insubsequent periods if actual forfeitures differ from those estimates. As of December 31, 2017, total unrecognized stock-based compensation expense relatedto non-vested awards and options was $53.4 million and this expense is expected to be recognized over a weighted-average period of 2.3 years.Allscripts Long-Term Incentive PlanAllscripts Amended and Restated 2011 Stock Incentive Plan (the “Plan”) provides for the granting of stock options, service-based share awards,performance-based share awards and market-based share awards, among other awards. As of December 31, 2017, there were 7.7 million shares of commonstock reserved for issuance under future share-based awards to be granted to any of Allscripts employees, officers, directors or independent consultants atterms and prices to be determined by our Board, and subject to the terms of the Plan.We issue service-based, performance-based and market-based awards in the form of restricted stock units, stock options or shares. A description of eachcategory of awards is presented below.Service-based Share AwardsService-based share awards include stock options, restricted stock units and restricted shares, and typically vest over a four-year period commencingon the date of grant subject to continued service with the company. Upon termination of an employee’s employment, any unvested service-based shareawards are forfeited unless otherwise provided in an employee’s employment agreement. Deferred share units are awarded to directors and vest within oneyear, when issued in lieu of annual share awards, or immediately, when issued in lieu of cash compensation. We recognize the expense for service-based shareawards over the requisite service period on a straight-line basis, net of estimated forfeitures.As of December 31, 2017, there was $40.5 million of total estimated unrecognized stock-based compensation expense related to the service-basedshare awards, which is expected to be recognized over a weighted-average period of 2.6 years.Performance-based Share AwardsPerformance-based share awards include restricted stock units and restricted shares. The purpose of such awards is to align management’scompensation with our financial performance and other operational objectives and, in certain cases, to retain key employees over a specified performanceperiod. Awards granted under this category are based on the achievement of various targeted financial measures, including, but not limited to, non-GAAPEBITDA and revenue growth, as defined in the grant agreements. The awards are earned based on actual results achieved compared to targeted amounts.Stock-based compensation expense related to these awards is recognized over three-year and four-year vesting periods under the accelerated attributionmethod if and when we conclude that it is probable that the performance conditions will be achieved.As of December 31, 2017, there was $4.5 million of total estimated unrecognized stock-based compensation expense, assuming various targetattainments related to the performance-based share awards, which is expected to be recognized over a weighted-average period of 1.4 years. 107 Market-based Share AwardsMarket-based share awards include restricted stock units. The purpose of such awards is to align management’s compensation with the performance ofour common stock relative to the market. Awards granted under this category are dependent on our total shareholder returns relative to a specified peer groupof companies over three-year performance periods with vesting based on three annual performance segments from the grant dates. Fair values of the awardswere estimated at the date of the grants using the Monte Carlo pricing model. Following completion of each of the three-year performance periods, theCompensation Committee of our Board will determine the number of awards that would vest considering overall performance over the three-year performanceperiods. If the number of shares that would vest under this scenario is greater than the amount vesting under the three annual performance segments, then suchgreater number of awards shall vest, reduced by the number of awards previously vested. Stock-based compensation expense related to these awards will berecognized over three-year vesting periods under the accelerated attribution method.As of December 31, 2017, there was $8.4 million of total estimated unrecognized stock-based compensation expense, which is expected to berecognized over a weighted-average period of 1.8 years.Restricted Stock Units and AwardsThe following table summarizes the activity for restricted stock units during the periods presented: Weighted-Average (In thousands, except per share amounts) Shares Grant Date Fair Value Unvested restricted stock units as of December 31, 2014 5,096 $15.69 Awarded 2,937 12.07 Vested (1,612) 14.84 Forfeited (1,042) 14.74 Unvested restricted stock units as of December 31, 2015 5,379 14.15 Awarded 3,480 12.88 Vested (2,095) 13.84 Forfeited (517) 14.30 Unvested restricted stock units as of December 31, 2016 6,247 13.54 Awarded 3,690 12.52 Vested (1,835) 13.74 Forfeited (843) 16.97 Unvested restricted stock units as of December 31, 2017 7,259 $12.57 Net Share-settlementsRestricted stock units and awards are generally net share-settled upon vesting to cover the required withholding tax and the remaining amount isconverted into an equivalent number of shares of common stock. The majority of restricted stock units that vested during the years ended December 31, 2017,2016 and 2015 were net-share settled such that we withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicableincome and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total payments for the employees’ minimum statutory taxobligations to the taxing authorities are reflected as a financing activity within the accompanying consolidated statements of cash flows. The total shareswithheld during the years ended December 31, 2017, 2016 and 2015 were 606 thousand, 648 thousand and 523 thousand, respectively, and were based onthe value of the restricted stock units on their vesting date as determined by our closing stock price. These net-share settlements had the effect of sharerepurchases by us as they reduced the number of shares that would have otherwise been issued as a result of the vesting. 108 Stock OptionsThe following table summarizes the status of stock options outstanding and the changes during the periods presented: Options Weighted-Average Options Weighted-Average (In thousands, except per share amounts) Outstanding Exercise Price Exercisable Exercise Price Balance as of December 31, 2014 3,427 $14.35 1,393 $14.97 Options granted 0 0.00 Options exercised (317) 11.44 Options forfeited (767) 15.89 Balance as of December 31, 2015 2,343 14.24 1,282 14.52 Options granted 0 0.00 Options exercised (6) 14.01 Options forfeited (434) 15.51 Balance as of December 31, 2016 1,903 13.95 1,431 13.98 Options granted 0 0.00 Options exercised (108) 14.01 Options forfeited (160) 15.00 Balance as of December 31, 2017 1,635 $13.85 1,635 $13.85We estimate the fair value of our service-based stock option awards on the date of grant using the Black-Scholes-Merton option-pricing model. Optionvaluation models, including the Black-Scholes-Merton option-pricing model, require the input of certain assumptions that involve judgment. Changes in theinput assumptions can materially affect the fair value estimates and, ultimately, how much we recognize as stock-based compensation expense. Our stockoptions have a contractual term of 7 years.The aggregate intrinsic value of stock options outstanding or exercisable as of December 31, 2017 was $1.2 million, based on our closing stock priceof $14.55 as of December 31, 2017. The intrinsic value of stock options outstanding represents the amount that would have been received by the optionholders had all option holders exercised their stock options as of that date.The following activity occurred under the Plan: Year Ended December 31, (In thousands) 2017 2016 2015 Total intrinsic value of stock options exercised $45 $1 $972 Total fair value of share awards vested $25,220 $26,892 $21,673The following table summarizes information about stock options outstanding under the Plan as of December 31, 2017: Number of Number of Options Weighted-Average Options Weighted-Average Range of Exercise Prices Outstanding Exercise Price Exercisable Exercise Price $12.72 to $14.01 1,498,901 $13.72 1,498,901 $13.72 $14.78 to $15.22 136,454 $15.19 136,454 $15.19 1,635,355 1,635,355 The weighted average remaining contractual life of the options outstanding and exercisable as of December 31, 2017 is 2.1 years. 109 Allscripts Employee Stock Purchase PlanOur Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to authorize payroll deductions of up to 20% of their base salary to beapplied toward the purchase of full shares of common stock on the last business day of each offering period. Offering periods under the ESPP are three monthsin duration and begin on each March 1st, June 1st, September 1st, and December 1st. Shares are purchased on the last day of each offering period at a discountof 15% to the fair market value of our common stock as reported on Nasdaq based on the lower of the closing price either on the first or last business day ofeach offering period. Employees are limited to purchasing shares under the ESPP having a collective fair market value no greater than $25,000 in any onecalendar year. The shares available for purchase under the ESPP may be drawn from either authorized but previously unissued shares of common stock orfrom reacquired shares of common stock, including shares purchased by us in the open market and held as treasury shares.We treat the ESPP as a compensatory plan in accordance with GAAP. There were 1.0 million and 756 thousand shares purchased under the ESPPduring the years ended December 31, 2017 and 2016, respectively. Netsmart Long-Term Incentive PlanNetsmart has established the Nathan Holding LLC 2016 Unit Option Plan (the “Netsmart Plan”) in order to provide key employees, managers,advisors and consultants of Netsmart and its affiliates with an opportunity to acquire an equity interest in Netsmart. The Plan provides for the maximumissuance of 115.3 million options related to Netsmart’s Class B Non-Voting Common Member Units (“Option Units”). The Option Unit grants may containvarying vesting conditions, including service, performance and market conditions established on a grant‑by‑grant basis as determined by the CompensationCommittee of Netsmart’s Board of Directors and expire no more than 10 years after the date of grant. The Netsmart Plan includes a call right which enablesNetsmart to repurchase any outstanding units in the event of termination of employment. At December 31, 2017, there were 25.4 million Class B Non-VotingCommon Units available for further issuance under the Netsmart Plan. As discussed further below, for the years ended December 31, 2017 and December 31,2016, Netsmart issued 3.1 and 89.9 million Option Units, respectively, to officers and employees at an exercise price of $1.00 per Option Unit, which wasequal to the fair value of Netsmart’s Common Units at the date of grant.Netsmart established a 2017 CAGR Unit Option Plan (the “Netsmart CAGR Plan”) during the year ended December 31, 2017. The CAGR Planprovides for the maximum issuance of 300 option units which reduce the amount available in the Netsmart Plan. These options expire 10 years after the dateof grant. Option grants contain performance vesting conditions tied to the performance of a subset of Netsmart’s revenue. During 2017, all 300 option unitswere issued at an exercise price of $1.00 to current associates and all expire ten years after the date of grant.Time-based AwardsDuring the years ended December 31, 2017 and December 31, 2016, Netsmart granted 2.2 million and 64.2 million Option Units, respectively, tocertain of its executives and employees. During the same periods, 0.5 million and 1.7 million time-based Option Units, respectively, were forfeited. TheOption Units vest ratably over a period of four years, with the first twenty-five percent vesting at the first anniversary of the issuance and the remainingvesting in equal monthly increments over the next three years. The Option Units are liability‑classified awards requiring the Option Units to be re‑measuredat fair value at each reporting period.Performance-based AwardsUnder the Netsmart Plan, Netsmart granted 0.9 million and 25.7 million Option Units to certain of its executives and employees during the yearsended December 31, 2017 and December 31, 2016, respectively, to reward the recipients if certain future financial objectives are met. During the sameperiods, 0.2 million and 0.7 million performance-based Option Units, respectively, were forfeited. In addition to a service condition, these Option Units onlyvest upon attaining certain future performance and market conditions. There was no stock compensation expense recorded for these performance‑basedOption Units, since achievement of the performance conditions was not considered probable at December 31, 2017.Under the Netsmart CAGR Plan, Netsmart granted 300 performance-based option units to certain of its employees to reward the recipients if certainfuture financial objectives are met. The options were granted with an exercise price of $1.00 per common unit, which was equal to the fair market value ofNetsmart’s common unit at the date of grant. In addition to a service condition, these options only vest upon attaining certain performance conditions. Therewas no stock compensation expense recognized during the year ended December 31, 2017 for these performance-based awards, since achievement of theperformance conditions were not considered probable. 110 A summary of the activity under the Netsmart Plan during the years ended December 31, 2016 and December 31, 2017 is as follows:(Option Units in thousands, except per unit amounts) Option Units Weighted AverageExercise Price Balance as of December 31, 2015 0 $0.00 Granted 89,889 1.00 Called 0 0.00 Exercised 0 0.00 Forfeited (2,316) 1.00 Outstanding – December 31, 2016 87,573 1.00 Exercisable – December 31, 2016 0 0.00 Granted 3,385 1.00 Called 0 0.00 Exercised 0 0.00 Forfeited (701) 1.00 Outstanding – December 31, 2017 90,257 1.00 Exercisable – December 31, 2017 26,625 $1.00Option Units outstanding at December 31, 2017 are as follows:(Option Units in thousands, except per unitamounts) Outstanding Exercisable Exercise price Option Units WeightedAverageFairValue WeightedAverageRemainingLife Option Units AverageFairValue WeightedAverageRemainingLife $1.00 90,257 $0.30 8.34 26,625 $0.30 8.31There were no option exercises for the years ended December 31, 2017 and December 31, 2016. As the current fair value of a common unit atDecember 31, 2017 and December 31, 2016 were less than the exercise price, there was no intrinsic value related to the outstanding Option Units.The stock-based compensation expense was included in the following categories in our consolidated statement of operations for the years endedDecember 31, 2017 and December 31, 2016: Year Ended December 31, (In thousands) 2017 2016 2015 Cost of revenue: Software delivery, support and maintenance $65 $103 $0 Client services 53 130 0 Total cost of revenue 118 233 0 Selling, general and administrative expenses 2,050 5,427 0 Research and development 61 146 0 Total stock-based compensation expense (benefit) $2,229 $5,806 $0The company recognized no tax benefits related to share-based compensation expense for the years ended December 31, 2017 and December 31,2016. At December 31, 2017 and December 31, 2016, the liability for outstanding awards was $8.0 million and $5.8 million, respectively.The fair value of Option Units vested as of December 31, 2017 and December 31, 2016 was estimated using the Black‑Scholes‑Merton option pricingmodel using the following weighted-average assumptions: 2017 2016 Average expected term in years 4.53 5.50 Risk free rate (weighted average) 2.2% 2.0%Expected dividends 0.0% 0.0%Average volatility 60.0% 55.0% 111 Netsmart determined the estimated unit fair value of $0.72 and $0.47 at December 31, 2017 and December 31, 2016, respectively. The December 31,2017 and 2016 values were determined using a weighting between a discounted cash flow model and a market comparable model. The expected term of the awards was determined based upon an estimate of the expected term of “plain vanilla” options as prescribed by thesimplified method. The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Netsmart estimates expected volatilitybased primarily on historical monthly volatility of comparable companies in the healthcare information technology sector that are publicly traded.Netsmart has $11.3 million of share‑based compensation expense remaining to be recognized (based on the December 31, 2017 option unit fairvalues) over future periods as follows: $4.8 million in 2018, $4.8 million in 2019, $1.6 million in 2020 and $0.1 million in 2021. 9. Stockholders’ EquityStock RepurchasesOn November 17, 2016, we announced that our Board approved a new stock purchase program under which we may repurchase up to $200 million ofour common stock through December 31, 2019. The new stock program supersedes the previously existing stock repurchase program, which authorized us torepurchase up to $150 million of our common stock through December 31, 2018. During the year ended December 31, 2017, we purchased 1.0 million sharesof our common stock under the new program for a total of $12.1 million. During the year ended December 31, 2016, we purchased 2.2 million shares of ourcommon stock under the new program for a total of $24 million and 8.1 million shares of our common stock under the prior program for a total of $97million. Any share repurchase transactions may be made through open market transactions, block trades, privately negotiated transactions (includingaccelerated share repurchase transactions) or other means, subject to market conditions. Any repurchase activity will depend on many factors such as ourworking capital needs, cash requirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of ourcommon stock, and other factors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at anytime.Issuance of Common Stock and WarrantsOn June 30, 2016, we issued to a commercial partner, as part of an overall commercial relationship, unregistered warrants to purchase (i) 900,000shares of our common stock, par value $0.01 per share at a price per share of $12.47, (ii) 1,000,000 shares of common stock at a price per share of $14.34 and(iii) 1,100,000 shares of common stock at a price per share of $15.59, in each case subject to customary anti-dilution adjustments. The warrants vest in fourequal annual installments of 750 thousand shares beginning in June 2017 and expire in June 2026. Our issuance of the warrants was a private placementexempt from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. These warrants are not actively traded and were valuedbased on an option pricing model that uses observable and unobservable market data for inputs. The warrants are valued at $11 million and are beingamortized into earnings over the four-year vesting period. The amortization of the warrant value is included as a reduction to revenue in the accompanyingconsolidated statements of operations.In June 2015, we sold 7,434,944 unregistered shares of our common stock previously held as treasury shares and issued warrants to purchase1,486,989 shares of our common stock at an exercise price equal to $17.675 per share of common stock, subject to customary anti-dilution adjustments, toNant Capital, LLC in a private placement exempt from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. Thesetransactions were meant to strengthen our strategic and commercial relationship with NantHealth and were made in conjunction with our investment inNantHealth as of the same date (refer to Note 2, “Business Combinations and Other Investments”). The common stock shares were sold at a price of $13.45 pershare, being the average closing price per share of our common stock on the Nasdaq Global Select Market for the 60 consecutive trading day period endingon and including June 24, 2015, for an aggregate purchase price of $100.0 million. The total proceeds of $100.0 million were allocated to the common stockshares and the warrants in the amounts of $98.3 million and $1.7 million, respectively. The warrants expired unexercised during 2016. 112 In June 2013, in connection with the issuance of the 1.25% Notes, we issued the 1.25% Warrants exercisable for 20.1 million shares of our commonstock (subject to anti-dilution adjustments under certain circumstances) with an initial exercise price of $23.135 per share, subject to customary adjustments.The net proceeds from the sale of the 1.25% Warrants of $51.2 million are included as additional paid in capital in the accompanying consolidated balancesheets as of December 31, 2017 and 2016. The 1.25% Warrants expire over a period of 70 trading days beginning on October 1, 2020 and are exercisableonly upon expiration. Additionally, if the market value per share of our common stock exceeds the strike price of the 1.25% Warrants on any trading dayduring the 70 trading day measurement period, we will, for each such trading day, be obligated to issue to the counterparties a number of shares equal invalue to the product of the amount by which such market value exceeds such strike price and 1/70th of the aggregate number of shares of our common stockunderlying the 1.25% Warrants transactions, subject to a share delivery cap. For each 1.25% Warrant that is exercised, we will deliver to the optioncounterparties a number of shares of our common stock equal to the amount by which the settlement price exceeds the exercise price, divided by thesettlement price, plus cash in lieu of fractional shares. We will not receive any additional proceeds if the 1.25% Warrants are exercised. The number ofwarrants and the strike price are subject to adjustment under certain circumstances. The 1.25% Warrants could separately have a dilutive effect to the extentthat the market value per share of our common stock (as measured under the terms of the warrant transactions) exceeds the applicable strike price of the 1.25%Warrants.In June 2013, we agreed to issue a warrant to a commercial partner as part of an overall commercial relationship pursuant to which the warrant holderhas the right to purchase 1.5 million shares of our common stock at a strike price of $12.94 per share. The warrant vests in four equal annual installments of375 thousand shares (beginning in June 2014) and expires in June 2020. Our issuance of the warrant was a private placement exempt from registrationpursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. This warrant is not actively traded and was valued based on an option pricingmodel that uses observable and unobservable market data for inputs. The warrant was valued at $10.2 million and is being amortized into earnings over thefour-year vesting period. The amortization of the warrant value is included in stock-based compensation expense in the accompanying consolidatedstatements of cash flows. 10. Accumulated Other Comprehensive LossAccumulated Other Comprehensive LossChanges in the balances of each component included in accumulated other comprehensive loss (“AOCI”) are presented in the tables below. Allamounts are net of tax and exclude non-controlling interest.(In thousands) ForeignCurrencyTranslationAdjustments Unrealized NetGains (Losses)on Availablefor SaleSecurities Unrealized NetGains (Losses) onInterest Rate Swap Unrealized NetGains (Losses) onForeign ExchangeContracts Total Balance as of December 31, 2014 (1) $(2,119) $140 $- $0 $(1,979)Other comprehensive income (loss) before reclassifications (2,381) 0 0 191 (2,190)Net losses (gains) reclassified from accumulated other comprehensive loss 0 (140) 0 67 (73)Net other comprehensive (loss) income (2,381) (140) 0 258 (2,263)Balance as of December 31, 2015 (2) (4,500) 0 0 258 (4,242)Other comprehensive (loss) income before reclassifications (1,528) (56,420) 0 683 (57,265)Net losses (gains) reclassified from accumulated other comprehensive loss 0 0 0 (322) (322)Net other comprehensive (loss) income (1,528) (56,420) 0 361 (57,587)Balance as of December 31, 2016 (3) (6,028) (56,420) 0 619 (61,829)Other comprehensive (loss) income before reclassifications 3,352 (106,445) 0 1,697 (101,396)Net losses (gains) reclassified from accumulated other comprehensive loss 0 162,865 0 (1,625) 161,240 Net other comprehensive (loss) income 3,352 56,420 0 72 59,844 Balance as of December 31, 2017 (4) $(2,676) $0 $0 $691 $(1,985)(1) Net of taxes of $88 thousand for unrealized net gains on marketable securities 113 (2) Net of taxes of $166 thousand for unrealized net gains on marketable securities and foreign exchange contract derivatives(3) Net of taxes of $463 thousand for unrealized net gains on marketable securities and foreign exchange contract derivatives(4) Net of taxes of $445 thousand for unrealized net gains on foreign exchange contract derivativesIncome Tax Effects Related to Components of Other Comprehensive LossThe following tables reflect the tax effects allocated to each component of other comprehensive loss (“OCI”) Year Ended December 31, 2017 (In thousands) Before-TaxAmount Tax Effect Net Amount Foreign currency translation adjustments $3,352 $0 $3,352 Available for sale securities: Net gain arising during the period (106,506) 61 (106,445)Net gain reclassified into income 162,865 0 162,865 Net change in unrealized gains on available for sale securities 56,359 61 56,420 Derivatives qualifying as cash flow hedges: Foreign exchange contracts: Net gains (losses) arising during the period 2,776 (1,079) 1,697 Net (gains) losses reclassified into income (2,662) 1,037 (1,625)Net change in unrealized gains (losses) on foreign exchange contracts 114 (42) 72 Net gain (loss) on cash flow hedges 114 (42) 72 Other comprehensive loss $59,825 $19 $59,844 Year Ended December 31, 2016 (In thousands) Before-TaxAmount Tax Effect Net Amount Foreign currency translation adjustments $(1,528) $0 $(1,528)Available for sale securities: Net gain arising during the period (56,359) (61) (56,420)Net gain reclassified into income 0 0 0 Net change in unrealized gains on available for sale securities (56,359) (61) (56,420)Derivatives qualifying as cash flow hedges: Foreign exchange contracts: Net gains (losses) arising during the period 1,128 (445) 683 Net (gains) losses reclassified into income (531) 209 (322)Net change in unrealized gains (losses) on foreign exchange contracts 597 (236) 361 Net gain (loss) on cash flow hedges 597 (236) 361 Other comprehensive loss $(57,290) $(297) $(57,587) 114 Year Ended December 31, 2015 (In thousands) Before-TaxAmount Tax Effect Net Amount Foreign currency translation adjustments $(2,381) $0 $(2,381)Available for sale securities: Net gain arising during the period 0 0 0 Net gain reclassified into income (228) 88 (140)Net change in unrealized gains on available for sale securities (228) 88 (140)Derivatives qualifying as cash flow hedges: Interest rate swap: Net loss arising during the period 0 0 0 Net loss reclassified into income 0 0 0 Net change in unrealized losses on interest rate swap 0 0 0 Foreign exchange contracts: Net gains (losses) arising during the period 314 (123) 191 Net (gains) losses reclassified into income 110 (43) 67 Net change in unrealized gains (losses) on foreign exchange contracts 424 (166) 258 Net gain (loss) on cash flow hedges 424 (166) 258 Other comprehensive loss $(2,185) $(78) $(2,263) 11. Derivative Financial InstrumentsThe following tables provide information about the fair values of our derivative financial instruments as of the respective balance sheet dates: December 31, 2017 Asset Derivatives Liability Derivatives (In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives qualifying as cash flow hedges: Foreign exchange contracts Prepaid expenses and other current assets $1,136 Accrued expenses $0 Derivatives not subject to hedge accounting: 1.25% Call Option Other assets 46,578 N/A 1.25% Embedded cash conversion option N/A Other liabilities 47,777 Total derivatives $47,714 $47,777 December 31, 2016 Asset Derivatives Liability Derivatives (In thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives qualifying as cash flow hedges: Foreign exchange contracts Prepaid expenses and other current assets $1,021 Accrued expenses $0 Derivatives not subject to hedge accounting: 1.25% Call Option Other assets 17,080 N/A 1.25% Embedded cash conversion option N/A Other liabilities 17,659 Total derivatives $18,101 $17,659 115 N/A – We define “N/A” as disclosure not being applicableForeign Exchange ContractsStarting in 2015, we entered into non-deliverable forward foreign currency exchange contracts with reputable banking counterparties in order tohedge a portion of our forecasted future Indian Rupee-denominated (“INR”) expenses against foreign currency fluctuations between the United States dollarand the INR. These forward contracts cover a decreasing percentage of forecasted monthly INR expenses over time. As of December 31, 2017, there were 6forward contracts outstanding that were staggered to mature monthly starting in January 2018 and ending in June 2018. In the future, we may enter intoadditional forward contracts to increase the amount of hedged monthly INR expenses or initiate hedges for monthly periods beyond June 2018. As ofDecember 31, 2017, the notional amounts of outstanding forward contracts were 120 million INR, or the equivalent of $1.9 million United States dollars,based on the exchange rate between the United States dollar and the INR in effect as of December 31, 2017. These amounts also approximate the ranges offorecasted future INR expenses we target to hedge in any one month in the future.The critical terms of the forward contracts and the related hedged forecasted future expenses matched and allowed us to designate the forwardcontracts as highly effective cash flow hedges. The effective portion of the change in fair value is initially recorded in AOCI and subsequently reclassified toincome in the period in which the cash flows from the associated hedged transactions affect income. Any ineffective portion of the change in fair value of thecash flow hedges is recognized in current period income. During the year ended December 31, 2017, no amount was excluded from the effectivenessassessment and no gains or losses were reclassified from AOCI into income as a result of forecasted transactions that failed to occur. As of December 31, 2017,we estimate that $1.1 million of net unrealized derivative gains included in AOCI will be reclassified into income within the next twelve months.The following tables show the impact of derivative instruments designated as cash flow hedges on the consolidated statements of operations and theconsolidated statements of comprehensive loss: Amount of Gain (Loss) Recognized in OCI(Effective Portion) Location of Gain (Loss)Reclassified from AOCI intoIncome (Effective Portion) Amount of Gain (Loss) Reclassified fromAOCI into Income (Effective Portion) Year Ended December 31, Year Ended December 31, (In thousands) 2017 2016 2015 2017 2016 2015 Foreign exchange contracts $2,776 $1,128 $314 Cost of Revenue $905 $165 $(34) Selling, general and administrative expenses 692 133 (28) Research and development 1,065 233 (48)1.25% Call OptionIn June 2013, concurrent with the issuance of the 1.25% Notes, we entered into the 1.25% Call Option with certain of the initial purchasers of the1.25% Notes (the “Option Counterparties”). Assuming full performance by the option counterparties, the 1.25% Call Option is intended to offset cashpayments in excess of the principal amount due upon any conversion of the 1.25% Notes.Aside from the initial payment of a premium to the Option Counterparties of $82.8 million for the 1.25% Call Option, we will not be required to makeany cash payments to the Option Counterparties under the 1.25% Call Option, and, subject to the terms and conditions thereof, will be entitled to receivefrom the Option Counterparties an amount of cash, generally equal to the amount by which the market price per share of our common stock exceeds the strikeprice of the 1.25% Call Option during the relevant valuation period. The strike price under the 1.25% Call Option is initially equal to the conversion price ofthe 1.25% Notes of $17.19 per share of our common stock.The 1.25% Call Option, which is indexed to our common stock, is a derivative asset that requires mark-to-market accounting treatment due to the cashsettlement features until the 1.25% Call Option settles or expires. The 1.25% Call Option is measured and reported at fair value on a recurring basis withinLevel 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the 1.25% Call Option, refer to Note 1, “Basis ofPresentation and Significant Accounting Policies.”The 1.25% Call Option does not qualify for hedge accounting treatment. Therefore, the change in fair value of these instruments is recognizedimmediately in our consolidated statements of operations in other income, net. Because the terms of the 1.25% Call Option are substantially similar to thoseof the 1.25% Notes embedded cash conversion option, discussed next, we expect the net effect of those two derivative instruments on our results ofoperations to continue to be minimal. 116 1.25% Notes Embedded Cash Conversion OptionThe embedded cash conversion option within the 1.25% Notes is required to be separated from the 1.25% Notes and accounted for separately as aderivative liability, with changes in fair value recognized immediately in our consolidated statements of operations in other income, net until the cashconversion option settles or expires. The initial fair value liability of the embedded cash conversion option was $82.8 million, which simultaneously reducedthe carrying value of the 1.25% Notes (effectively an original issuance discount). The embedded cash conversion option is measured and reported at fairvalue on a recurring basis within Level 3 of the fair value hierarchy. For further discussion of the inputs used to determine the fair value of the embedded cashconversion option, refer to Note 1, “Basis of Presentation and Significant Accounting Policies.”The following table shows the net impact of the changes in fair values of the 1.25% Call Option and 1.25% Notes embedded cash conversion optionin the consolidated statements of operations: Year Ended December 31, (In thousands) 2017 2016 2015 1.25% Call Option $29,498 $(63,128) $23,117 1.25% Embedded cash conversion option (30,118) 63,551 (23,371)Net (loss) gain included in other income, net $(620) $423 $(254) 12. CommitmentsOperating and Capital LeasesWe conduct our operations from leased premises under a number of operating leases. We also lease office and IT equipment under capital leases.Certain office leases contain renewal options and rent escalation clauses calling for rent increases over the term of the leases. All leases which contain a rentescalation clause are accounted for on a straight-line basis. Total rent expense recognized, which consists of the base rental amount and other lessor chargeswhen mandated in a lease agreement, was as follows: Year Ended December 31, (In thousands) 2017 2016 2015 Rent expense $32,657 $24,745 $18,164 Our future commitments under capital and operating leases are shown below. The capital lease amounts related to prepaid maintenance, as well as therelated prepaid maintenance costs, are not included in our financials as they are considered executory costs. Future operating lease commitments arecalculated using the base rental amount and foreign currency exchange rates in effect as of December 31, 2017. Capital Operating (In thousands) Leases Leases 2018 $11,148 $28,534 2019 5,976 25,297 2020 1,203 22,195 2021 158 18,008 2022 0 13,955 Thereafter 0 35,239 18,485 $143,228 Less amount representing interest (1,246) Less amount related to executory costs (2,269) 14,970 Current maturities of capital lease obligations 7,865 Capital lease obligations, net of current maturities $7,105 117 Commitment with Strategic PartnerDuring 2017, we completed renegotiations with Atos and our other largest hosting partners to improve the operating cost structure of our private cloudhosting operations. As a result of these renegotiations, we signed a new restated and amended agreement with Atos and, therefore, starting in 2018, we willbegin to transition substantially all of our hosting services to Atos. The increased scale of the relationship is expected to result in future reductions in thebase fees and volume fee rates.We are currently in the seventh year of a ten-year agreement with Atos (formerly known as Xerox Consultant Services) to provide services to supportour private cloud hosting services for our Sunrise acute care clients. We maintain all client relationships and domain expertise with respect to the hostedapplications. The new amended and restated agreement extends the term to 2023 with annual auto-renewal periods for an additional two years thereafter. Thenew agreement also provides for the payment of initial annual base fees of $30 million per year (decreasing to $25 million by the end of the agreement) pluscharges for volume-based services currently projected using volumes estimated based on historical actuals and forecasted projections. During the year endedDecember 31, 2017, we incurred $59 million of expenses under our existing agreement with Atos, which are included in cost of revenue in our consolidatedstatements of operations. Year Ended December 31, (In thousands) 2017 2016 2015 Expenses incurred under Atos agreement $58,787 $62,266 $67,058 13. Discontinued OperationsTwo of the product offerings acquired with the EIS Business, Horizon Clinicals and Series2000 Revenue Cycle, are to be sunset after the first quarterof 2018. The decision to discontinue these solutions was made prior to our acquisition of the EIS Business and, therefore, are presented below asdiscontinued operations. Until the end of the first quarter of 2018, we will be involved in ongoing maintenance and support for these solutions untilcustomers have transitioned to other platforms. No disposal gains or losses were recognized during the year ended December 31, 2017 related to thisdiscontinued operation.The following table summarizes the major classes of assets and liabilities of the discontinued operation, as reported on the consolidated balance sheetas of December 31, 2017: (In thousands) December 31, 2017 Carrying amounts of major classes of assets included as part of discontinued operations: Accounts receivable, net $8,196 Prepaid expenses and other current assets 3,080 Other classes of assets that are not major 0 Total assets attributable to discontinued operations $11,276 Carrying amounts of major classes of liabilities included as part of discontinued operations: Accounts payable $114 Accrued expenses 5,599 Accrued compensation and benefits 7,728 Deferred revenue 7,241 Other classes of liabilities that are not major 676 Total liabilities attributable to discontinued operations $21,358The following table summarizes the major classes of line items constituting income (loss) of the discontinued operation, as reported in theconsolidated statements of operations for the year ended December 31, 2017: 118 Year Ended (In thousands) December 31, 2017 Major classes of line items constituting pretax profit (loss) of discontinued operations Revenue: Software delivery, support and maintenance $10,949 Client services 1,044 Total revenue 11,993 Cost of revenue: Software delivery, support and maintenance 2,918 Client services 261 Total cost of revenue 3,179 Gross profit 8,814 Selling, general and administrative expenses 0 Research and development 1,148 Income (loss) before income taxes 7,666 Income tax benefit (provision) (2,990)Income from discontinued operations, net of tax $4,676During the year ended December 31, 2017, the discontinued operation generated $3.1 million of cash. 14. Business SegmentsWe primarily derive our revenues from sales of our proprietary software (either as a direct license sale or under a subscription delivery model), whichalso serves as the basis for our recurring service contracts for software support and maintenance and certain transaction-related services. In addition, weprovide various other client services, including installation, and managed services such as outsourcing, private cloud hosting and revenue cyclemanagement.During 2017, we completed the acquisitions of EIS and NantHealth’s provider and patient engagement solutions business. These acquisitions initiallyresulted in the formation of four new operating segments: (i) EIS-Paragon, (ii) EIS-Enterprise Workflow Solutions (“EIS-EWS”), (iii) EIS-Classics, and (iv)NantHealth. Refer to Note 2, “Business Combinations and Other Investments,” in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form10-K for further information about these acquisitions. The EIS-Paragon operating segment provides integrated electronic health record and revenue cyclemanagement solutions for the small hospital market segment and was integrated within our Hospitals and Health Systems operating segment during thefourth quarter of 2017. The EIS-EWS operating segment primarily provides document, content and supply chain management solutions. The EIS-Classicsoperating segment primarily provides revenue cycle management solutions. The NantHealth operating segment provides provider and patient engagementsolutions. Based on the qualitative and quantitative criteria under Accounting Standards Codification Topic 280, Segment Reporting, we concluded that theEIS-Classics operating segments can be included as part of the Clinical and Financial reportable segment while the EIS-EWS and NantHealth operatingsegments can be included as part of the Population Health reportable segment. 119 As a result of the above changes, as of December 31, 2017, we had ten operating segments, which are aggregated into three reportable segments. TheClinical and Financial Solutions reportable segment includes the Hospitals and Health Systems, Ambulatory, Payer and Life Sciences, and EIS-Classicsstrategic business units, each of which represents a separate operating segment. This reportable segment derives its revenue from the sale of integrated clinicalsoftware applications and financial and information solutions, which primarily include Electronic Health Record-related software, financial and practicemanagement software, related installation, support and maintenance, outsourcing, private cloud hosting, revenue cycle management, training and electronicclaims administration services. The Population Health reportable segment is comprised of five separate operating segments which include Population Health,FollowMyHealth®, EPSiTM, EIS-EWS and NantHealth. This reportable segment derives its revenue from the sale of health management and coordinated caresolutions, which are mainly targeted at hospitals, health systems, other care facilities and Accountable Care Organizations (“ACOs”). These solutions enableclients to connect, transition, analyze, and coordinate care across the entire care community. The Netsmart reportable segment is comprised of the Netsmartstrategic business unit, which represents a separate operating segment. Netsmart operates in the behavioral healthcare information technology fieldthroughout the United States and provides software and technology solutions to the health and human services sector, which comprises behavioral health,addiction treatment, intellectual and developmental disability services, child and family services, and public health market segments.The results of operations related to two of the product offerings acquired with the EIS Business are presented throughout these financial statements asdiscontinued operations and are included in the Clinical and Financial Solutions reportable segment, except for acquisition-related deferred revenueadjustments, which are included in “Unallocated Amounts”. Refer to Note 13, “Discontinued Operations”.Our Chief Operating Decision Maker (“CODM”) uses segment revenues, gross profit and income from operations as measures of performance and tomake decisions on allocation of resources. With the exception of the Netsmart segment, in determining these performance measures, we do not include inrevenue the amortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in abusiness acquisition. With the exception of the Netsmart segment, we also exclude the amortization of intangible assets, stock-based compensation expense,non-recurring expenses and transaction-related costs, and non-cash asset impairment charges from the operating segment data provided to our CODM. Non-recurring expenses relate to certain severance, product consolidation, legal, consulting and other charges incurred in connection with activities that areconsidered one-time. Accordingly, these amounts are not included in our reportable segment results and are included in an “Unallocated Amounts” categorywithin our segment disclosure. The “Unallocated Amounts” category also includes corporate general and administrative expenses (including marketingexpenses), which are centrally managed, as well as revenue and the associated cost from the resale of certain ancillary products, primarily hardware, other thanthe respective amounts associated with the Netsmart segment. The historical results of our HomecareTM business prior to the Netsmart Transaction in 2016,which were previously reported as part of Population Health, are also included in the “Unallocated Amounts” category. The Netsmart segment, as presented,includes all revenue and expenses incurred by Netsmart since it operates as a stand-alone business entity and its resources allocation and performance arereviewed and measured at such all-inclusive level. The eliminations of intercompany transactions between Allscripts and Netsmart are included in the“Unallocated Amounts” category. We do not track our assets by segment. 120 Year Ended December 31, (In thousands) 2017 2016 2015 Revenue: Clinical and Financial Solutions $1,251,299 $1,125,617 $1,105,504 Population Health 270,447 234,662 219,861 Netsmart 319,074 173,361 0 Unallocated Amounts (22,485) 16,259 61,028 Discontinued Operations (11,993) 0 0 Total revenue $1,806,342 $1,549,899 $1,386,393 Gross Profit: Clinical and Financial Solutions $532,152 $471,814 $452,058 Population Health 190,394 171,404 147,095 Netsmart 149,550 70,289 0 Unallocated Amounts (81,121) (42,468) (18,588)Discontinued Operations (8,814) 0 0 Total gross profit $782,161 $671,039 $580,565 Income (loss) from operations: Clinical and Financial Solutions $285,552 $251,886 $234,146 Population Health 131,174 111,956 91,887 Netsmart 29,473 (7,412) 0 Unallocated Amounts (396,616) (296,659) (294,150)Discontinued Operations (7,666) 0 0 Total income from operations $41,917 $59,771 $31,883 15. Supplemental DisclosuresThe majority of the restricted cash balance as of December 31, 2017 represents Netsmart’s cash deposits to maintain two letters of credit with afinancial institution related to customer agreements and an escrow fund related to a previous acquisition associated with the acquired EIS Business. Year Ended December 31, (In thousands) 2017 2016 2015 Cash paid during the period for: Interest $67,764 $41,954 $15,750 Income taxes paid, net of tax refunds $6,897 $2,951 $5,037 Non-cash transactions: Exchange of Netsmart, Inc. common stock for redeemable convertible preferred stock in Netsmart by Netsmart, Inc. management $0 $25,543 $0 Accretion of redemption preference on redeemable convertible non-controlling interest in Netsmart $43,850 $28,536 $0 Obligations incurred to purchase capitalized software or enter into capital leases $5,244 $28,970 $393 Change in fair value of commercial agreement with NantHealth $22,900 $0 $0 Accrued expenses consist of the following: December 31, December 31, (In thousands) 2017 2016 Royalties, certain third-party product costs and licenses $14,718 $17,359 Other 71,197 68,776 Total accrued expenses $85,915 $86,135Other consists of various accrued expenses and no individual item accounted for more than 5% of the current liabilities balance at the respectivebalance sheet dates. 121 Other assets consist of the following: December 31, December 31, (In thousands) 2017 2016 Reseller agreement with Nant Health, LLC $22,252 $0 Fair value of 1.25% Call Option 46,578 17,080 Long-term prepaid commissions 32,938 40,668 Investments in non-marketable securities 30,013 29,603 Long-term deposits and other assets 17,068 10,440 Total other assets $148,849 $97,791 16. Geographic InformationRevenues are attributed to geographic regions based on the location where the sale originated. Our revenues by geographic area are summarizedbelow: Year Ended December 31, (In thousands) 2017 2016 2015 United States $1,749,476 $1,500,629 $1,338,095 Canada 15,818 18,694 18,024 Other international 41,048 30,576 30,274 Total $1,806,342 $1,549,899 $1,386,393A summary of our long-lived assets, comprised of fixed assets by geographic area, is presented below: December 31, December 31, (In thousands) 2017 2016 United States $159,207 $140,552 India 4,154 5,735 Israel 1,322 1,568 Canada 146 353 Other international 774 602 Total $165,603 $148,810 17. ContingenciesIn addition to commitments and obligations in the ordinary course of business, we are currently subject to various legal proceedings and claims thathave not been fully adjudicated, certain of which are discussed below. We intend to vigorously defend ourselves in these matters.No less than quarterly, we review the status of each significant matter and assess our potential financial exposure. We accrue a liability for anestimated loss if the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated. Significantjudgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable, andaccruals are based only on the information available to our management at the time the judgment is made.The outcome of legal proceedings or investigations is inherently uncertain, and we may incur substantial defense costs and expenses defending any ofthese matters. In the opinion of our management, the ultimate disposition of pending legal proceedings or investigations will not have a material adverseeffect on our consolidated financial position, liquidity or results of operations. However, if one or more of these matters were resolved against us in areporting period for amounts in excess of our management’s expectations, our consolidated financial statements for that reporting period could be materiallyadversely affected. Additionally, the resolution of any of these matters against us could prevent us from offering our products and services to current orprospective clients or cause us to incur increased compliance costs, either of which could further adversely affect our operating results. 122 On May 1, 2012, Physicians Healthsource, Inc. filed a class action complaint in the U.S. District Court for the Northern District of Illinois against us.The complaint alleges that, on multiple occasions between July 2008 and December 2011, we or our agent sent advertisements by fax to the plaintiff and aclass of similarly situated persons, without first receiving the recipients’ express permission or invitation in violation of the Telephone Consumer ProtectionAct, 47 U.S.C. § 227 (the “TCPA”). The plaintiff sought $500 for each alleged violation of the TCPA, treble damages if the Court finds the violations to bewillful, knowing or intentional; and injunctive and other relief. Allscripts answered the complaint denying all material allegations and asserting a number ofaffirmative defenses, as well as counterclaims for breach of a license agreement. On March 31, 2016, plaintiff filed its motion for class certification. On May31, 2016, we filed our opposition to plaintiff’s motion for class certification, and simultaneously moved for summary judgment on all of plaintiff’s claims. OnJune 2, 2017, an order was entered denying class certification and, accordingly, the case will not proceed on a class-wide basis.The EIS Business acquired from McKesson on October 2, 2017 is subject to a May 2017 civil investigative demand (“CID”) from the U.S.Attorney’s Office for the Eastern District of New York. The CID requests documents and information related to the certification McKesson obtained inconnection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program. McKesson has agreed, with respect to theCID, to indemnify Allscripts for amounts paid or payable to the government (or any private relator) involving any products or services marketed, sold orlicensed by the EIS Business as of or prior to the closing of the acquisition.Practice Fusion, Inc. (“Practice Fusion”), acquired by Allscripts on February 13, 2018, received in March 2017 a request for documents andinformation from the U.S. Attorney’s Office for the District of Vermont pursuant to a CID. The CID relates to the certification of Practice Fusion’s softwareunder the U.S. Office of the National Coordinator for Health Information Technology’s electronic health record certification program, and related businesspractices. It has been Practice Fusion’s practice to respond to such matters in a cooperative, thorough and timely manner. To date, the CID has not led to aclaim or legal proceeding against Practice Fusion.On January 25, 2018, a complaint was filed in Surfside Non-Surgical Orthopedics, P.A. v. Allscripts Healthcare Solutions, Inc., No. 1:18-cv-00566,in the Northern District of Illinois. This is a purported class action lawsuit related to a January 18, 2018 ransomware attack, and alleges the following counts:(1) negligence, gross negligence and negligence per se; (2) breach of contract; (3) unjust enrichment; (4) violation of the Illinois Consumer Fraud Act; and (5)violation of the Illinois Deceptive Trade Practices Act. 123 18. Quarterly Financial Information (Unaudited)The following tables contain a summary of our unaudited quarterly consolidated results of operations for our last eight fiscal quarters. Quarter Ended December 31, September 30, June 30, March 31, (In thousands, except per share amounts) 2017 (1) 2017 (1) 2017 2017 Revenue $517,334 $449,442 $426,091 $413,475 Cost of revenue 303,235 247,523 238,600 234,823 Gross profit 214,099 201,919 187,491 178,652 Selling, general and administrative expenses 146,037 117,352 112,037 110,845 Research and development 73,471 51,057 46,459 49,232 Asset impairment charges 0 0 0 0 Amortization of intangible and acquisition-related assets 10,414 8,137 7,891 7,312 Income from operations (15,823) 25,373 21,104 11,263 Interest expense (24,757) (22,252) (20,290) (20,180) Other income (expense), net 958 (570) (214) 239 Impairment of and losses on long-term investments 0 (20,700) (144,590) 0 Equity in net income (loss) of unconsolidated investments 115 449 (28) 285 Loss from continuing operations before income taxes (39,507) (17,700) (144,018) (8,393) Income tax benefit (provision) 49,694 (2) 238 1,007 (172) Income (loss) from continuing operations, net of tax 10,187 (17,462) (143,011) (8,565) Income from discontinued operations, net of tax 4,676 0 0 0 Net income (loss) 14,863 (17,462) (143,011) (8,565) Less: Net loss (income) attributable to non-controlling interest 1,918 (163) 264 (453) Less: Accretion of redemption preference on redeemable convertiblenon-controlling interest - Netsmart (10,963) (10,962) (10,963) (10,962) Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $5,818 $(28,587) $(153,710) $(19,980) Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share: Basic Continuing operations $0.00 $(0.16) $(0.85) $(0.11) Discontinued operations $0.03 $0.00 $0.00 $0.00 Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $0.03 $(0.16) $(0.85) $(0.11) Diluted Continuing operations $0.00 $(0.16) $(0.85) $(0.11) Discontinued opererations $0.03 $0.00 $0.00 $0.00 Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $0.03 $(0.16) $(0.85) $(0.11) 124 Quarter Ended December 31, September 30, June 30, March 31, (In thousands, except per share amounts) 2016 (3) 2016 (3) 2016 (3) 2016 Revenue $425,436 $392,384 $386,521 $345,558 Cost of revenue 239,138 226,225 219,837 193,660 Gross profit 186,298 166,159 166,684 151,898 Selling, general and administrative expenses 115,132 98,778 94,802 84,153 Research and development 47,836 45,142 47,891 47,037 Asset impairment charges 0 0 0 4,650 Amortization of intangible and acquisition-related assets 10,903 5,365 5,417 4,162 Income from operations 12,427 16,874 18,574 11,896 Interest expense (25,384)(5) (19,367) (16,421) (6,969) Other income (expense), net 621 (6) 106 366 Equity in net loss of unconsolidated investments 0 0 (4,898) (2,603) (Loss) income before income taxes (12,336) (2,499) (2,639) 2,690 Income tax benefit (provision) 15,218 (4) 2,656 (4) 503 (4) (563)(4)Net income (loss) 2,882 157 (2,136) 2,127 Less: Net (income) loss attributable to non-controlling interest (4) (151) 87 (78) Less: Accretion of redemption preference on redeemable convertiblenon-controlling interest - Netsmart (10,192) (10,191) (8,153) 0 Net (loss) income attributable to Allscripts Healthcare Solutions, Inc. stockholders $(7,314) $(10,185) $(10,202) $2,049 (Loss) earnings per share - basic and diluted attributable to Allscripts Healthcare Solutions, Inc. stockholders $(0.04) $(0.06) $(0.05) $0.01 (1)Results of operations for the quarter include the results of operations of (i) DeVero since July 17, 2017, (ii) the provider and patient engagement business of NantHealthsince August 25, 2017 and (iii) the results of operations of the EIS Business since October 2, 2017. (2)Income tax benefit (provision) for the quarter ended December 31, 2017, reflects the estimated impact of the United States Tax Cuts and Jobs Act which was enacted onDecember 22, 2017 and introduced significant changes to the income tax law in the United States. (3)Results of operations for the quarter include the results of operations of (i) Netsmart since April 19, 2016, (ii) HealthMEDX since October 27, 2016, and (iii) the results ofoperations of three third parties in which we acquired a controlling interest during the quarters ended September 30th December 31st, 2016 from the date of each acquisition.(4)Income tax benefit (provision) reflects the recognition (release) of a valuation allowance of ($14.3) million, ($3.3) million, $0.9 million and ($0.9) million for federal creditcarryforwards, and foreign and state net operating loss carryforwards in the quarters ended December 31, 2016, September 30, 2016, June 30, 2016, and March 31, 2016,respectively. (5)Interest expense includes the write-off of $5.2 million deferred debt issuance costs in connection with Netsmart’s amendment of its First Lien Credit Agreement during thequarter ended December 31, 2016 and the write-off of $1.4 million of deferred debt issuance costs in connection with amending the Senior Secured Credit Facility duringthe quarter ended September 30, 2015. 19. Subsequent EventsAcquisition of Practice Fusion, Inc.On January 5, 2018, Healthcare LLC and Presidio Sub, Inc., a Delaware corporation (“Sub”) and wholly-owned subsidiary of Healthcare LLC, enteredinto that certain Agreement and Plan of Merger (the “Merger Agreement”), by and among Healthcare LLC, Sub, Practice Fusion, Inc., a Delaware corporation(the “Practice Fusion”), Fortis Advisors LLC, as Holders’ Representative (as defined in the Merger Agreement), and Allscripts, solely for the purposes set forththerein, whereby Healthcare LLC would acquire all of the issued and outstanding shares of capital stock of Practice Fusion through the merger (the “Merger”)of Sub with and into Practice Fusion, with Practice Fusion surviving the Merger as a wholly-owned subsidiary of Healthcare LLC, upon the terms and subjectto the conditions contained in the Merger Agreement. The purchase price for the Merger, which closed on February 13, 2018, was $100 million (subject toadjustments for net 125 working capital, cash, debt and transaction expenses, in each case on the terms and subject to the conditions set forth in the Merger Agreement).The Merger Agreement requires Allscripts to issue restricted stock units to certain employees of Practice Fusion promptly following the consummationof the Merger, subject to satisfaction of the conditions set forth in the Merger Agreement. Subject to certain exceptions and limitations, after theconsummation of the Merger, the equityholders of Practice Fusion are obligated to indemnify Allscripts for breaches of representations, warranties andcovenants and for certain other matters. At the closing, Healthcare LLC deposited $5 million of the purchase price in escrow to be available to satisfy theindemnification obligations of the equityholders of Practice Fusion under the Merger Agreement.Divestiture of OneContent businessOn February 15, 2018, Allscripts, Healthcare, LLC and certain subsidiaries of Healthcare LLC and Hyland Software, Inc., an Ohio corporation(“Purchaser”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”). Upon the terms and subject to the conditions set forth in the AssetPurchase Agreement, Purchaser has agreed to acquire (the “ECM Transaction”) substantially all of the assets of the Allscripts’ business providing hospitalsand health systems document and other content management software and services generally known as “OneContent” (the “ECM Business”). Allscriptsacquired the OneContent business during the fourth quarter of 2017 through the acquisition of McKesson’s EIS business. Certain assets of Allscripts relatingto the ECM Business will be excluded from the transaction and retained by Allscripts, as described in the Asset Purchase Agreement. In addition, Purchaserwill assume certain liabilities related to the ECM Business under the terms of the Asset Purchase Agreement. The total consideration for the ECM Business is$260 million, which is subject to certain adjustments for liabilities assumed by the Purchaser and net working capital as described in the Asset PurchaseAgreement.Completion of the ECM Transaction is subject to various conditions, including, among others, (i) no order or other legal restraint or prohibition beingin effect that would prohibit or prevent the transactions from being consummated; (ii) no legal proceeding having been commenced by any governmentalentity that seeks to prohibit, enjoin or restrain the consummation of the transactions; and (iii) the applicable waiting period (and any extensions thereof)under the Hart-Scott-Rodino Antitrust Improvements Act having expired or otherwise having been terminated. Each party’s obligation to consummate theECM Transaction is also subject to certain additional conditions, including performance in all material respects by the other party of its obligations under theAsset Purchase Agreement. The Asset Purchase Agreement contains certain termination rights for both Purchaser and Allscripts, including if the closing of theECM Transaction has not occurred by May 16, 2018. The Asset Purchase Agreement contains customary representations and warranties of Allscripts andPurchaser as set forth therein, and Allscripts and Purchaser also agreed to customary covenants, including covenants requiring Allscripts to conduct the ECMBusiness in the ordinary course prior to the completion of the ECM Transaction.Second Amended Credit AgreementOn February 15, 2018, Allscripts and Healthcare LLC entered into a Second Amended and Restated Credit Agreement (the “Second Amended CreditAgreement”), with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), the several banks and other financial institutions orentities from time to time party thereto, and Fifth Third Bank, KeyBank National Association, SunTrust Bank and Wells Fargo Bank, National Association, assyndication agents, amending and restating the Amended and Restated Credit Agreement, dated September 30, 2015, as amended on March 28, 2016 andDecember 22, 2016 (the “Existing Credit Agreement”). The Second Amended Credit Agreement provides for a $400 million senior secured term loan (anincrease from the $250 million term loan provided under the Existing Credit Agreement) (the “Term Loan”) and a $900 million senior secured revolvingfacility (an increase from the $550 million revolving facility provided under the Existing Credit Agreement) (the “Revolving Facility”), each with a five-yearterm. The Term Loan is repayable in quarterly installments commencing on June 30, 2018. A total of up to $50 million of the Revolving Facility is availablefor the issuance of letters of credit, up to $10 million of the Revolving Facility is available for swingline loans, and up to $100 million of the RevolvingFacility could be borrowed under certain foreign currencies. Proceeds from the borrowings under the Second Amended Credit Agreement were used for therefinancing of loans under the Existing Credit Agreement. As of February 14, 2018, approximately $510 million was outstanding under the RevolvingFacility.The proceeds of the Revolving Facility can be used to finance Allscripts’ working capital needs and for general corporate purposes, including, withoutlimitation, financing of permitted acquisitions, and for share repurchases. Allscripts is also permitted to add one or more incremental revolving and/or termloan facilities in an aggregate amount of up to $600 million, subject to certain conditions (an increase from the $300 million incremental facility permittedunder the Existing Credit Agreement). 126 The initial applicable interest rate margin for Base Rate borrowings is 1.00%, and for Eurocurrency Rate borrowings is 2.00%. On and after September30, 2018, the interest rate margins will be determined from a pricing table and will depend upon Allscripts’ total leverage ratio. The applicable margins forBase Rate borrowings under the Second Amended Credit Agreement range from 0.50% to 1.25% depending on Allscripts’ total leverage ratio (as compared tothe 0.00% to 1.25% range provided under the Existing Credit Agreement). The applicable margins for Eurocurrency Rate loans range from 1.50% to 2.25%,depending on Allscripts’ total leverage ratio (as compared to the 1.00% to 2.25% range provided under the Existing Credit Agreement). 127 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted anevaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)promulgated under the Exchange Act, as of the end of the period covered by this Form 10-K.Based on management’s evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and proceduresare designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submitunder the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such informationis accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timelydecisions regarding required disclosure.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chieffinancial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based on theguidelines established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(2013 framework). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP.Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31,2017. We reviewed the results of management’s assessment with the Audit Committee of our Board.We excluded the EIS Business from our evaluation of internal control over financial reporting as of December 31, 2017 because the acquisition wascompleted on October 2, 2017, as further described in Note 2, “Business Combinations and Other Investments” to consolidated financial statements in Part II,Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. We are in the process of integrating policies, processes, people, technology, andoperations for our combined operations. The EIS Business’ total assets and revenues represent 8% and 5%, respectively of the related consolidated financialstatement amounts as of and for the year ended December 31, 2017. The effectiveness of our internal control over financial reporting as of December 31,2017 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in its report which is included in Part II, Item 8,“Financial Statements and Supplementary Data” of this Form 10-K.Changes in Internal Control over Financial ReportingThere have been no changes in our internal control over financial reporting during the quarter ended December 31, 2017, which were identified inconnection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, orare reasonably likely to materially affect, our internal control over financial reporting. As noted above, we excluded the EIS Business from our evaluation ofinternal control over financial reporting as of December 31, 2017 because the acquisition was completed during the fourth quarter of 2017. 128 Inherent Limitations on Effectiveness of ControlsOur management, including our chief executive officer and chief financial officer, do not expect that our disclosure controls or our internal controlover financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, notabsolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resourceconstraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation ofcontrols can provide absolute assurance that we have detected all control issues and instances of fraud, if any, within our company. These inherent limitationsinclude the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally,controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Thedesign of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that anydesign will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes inconditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,misstatements due to error or fraud may occur and not be detected.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information concerning our executive officers required by this Item is incorporated by reference from Part I, Item 4A of this Form 10-K, under theheading “Executive Officers.”Other information required by this Item is incorporated by reference from the information contained under the proposal “Election of Directors,” theheading “Directors,” and the subheadings “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Conduct” and “Audit Committee FinancialExpert” under the heading “Corporate Governance” in our 2018 Proxy Statement (the “2018 Proxy Statement”) to be filed with the U.S. Securities andExchange Commission (the “SEC”) within 120 days after December 31, 2017.Item 11. Executive CompensationThe information required by this Item is incorporated by reference from information contained under the heading “Compensation Discussion andAnalysis” and the subheadings “Board Oversight of Risk Management,” “Compensation Committee Interlocks and Insider Participation,” and“Compensation of Directors” under the heading “Corporate Governance” in the 2018 Proxy Statement to be filed with the SEC within 120 days afterDecember 31, 2017.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item is incorporated by reference from information contained under the headings “Security Ownership of CertainBeneficial Owners and Management” and “Equity Compensation Plan Information” in the 2018 Proxy Statement to be filed with the SEC within 120 daysafter December 31, 2017.Item 13. Certain Relationships and Related Transactions and Director IndependenceThe information required by this Item is incorporated by reference from information contained under the subheadings “Certain Relationships andRelated Transactions” and “Board Meetings and Committees” under the heading “Corporate Governance” in the 2018 Proxy Statement to be filed with theSEC within 120 days after December 31, 2017.Item 14. Principal Accountant Fees and ServicesThe information required by this Item is incorporated by reference from information contained under the subheadings “Fees and Related ExpensesPaid to Auditors” and “Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm” under theproposal “Ratification of Appointment of Independent Registered Public Accounting Firm” in the 2018 Proxy Statement to be filed with the SEC within 120days after December 31, 2017. 129 PART IVItem 15. Exhibits and Financial Statement Schedules(a)(1) Financial StatementsOur consolidated financial statements are included in Part II of this Form 10-K: Page Report of Independent Registered Public Accounting Firm 65 Report of Independent Registered Public Accounting Firm 66 Consolidated Balance Sheets as of December 31, 2017 and 2016 67 Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015 69 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016 and 2015 70 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015 71 Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 72 Notes to Consolidated Financial Statements 73 (a)(2) Financial Statement SchedulesSchedule II—Valuation and Qualifying Accounts Charged to Balance at Expenses/ Deferred Write-Offs, Balance at Beginning of Against Revenue Net of End of (In thousands) Year Revenue Reclassification Recoveries Year Allowance for doubtful accounts and sales credits Year ended December 31, 2017 $32,670 19,434 (8,234) (6,135) 37,735 Year ended December 31, 2016 $31,266 11,039 616 (10,251) 32,670 Year ended December 31, 2015 $36,047 $8,089 $(363) $(12,507) $31,266All other schedules are omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of theschedule, or because the information required is included in the consolidated financial statements and notes thereto. 130 (a)(3) Exhibits Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 2.1 Agreement and Plan of Merger, dated June 9, 2010, by and amongAllscripts-Misys Healthcare Solutions, Inc., Arsenal Merger Corp. andEclipsys Corporation 8-K 2.1 June 9, 2010 2.2 Share Purchase Agreement, dated as of March 4, 2013, amongAllscripts Healthcare Solutions, Inc., Allscripts HealthcareInternational Holdings, LLC, dbMotion, Ltd., the Sellers party theretoand Shareholder Representative Services LLC, as representative of theSellers 8-K 2.1 March 5, 2013 2.3 Contribution and Investment Agreement, dated as of March 20, 2016,by and among Allscripts Healthcare Solutions, Inc., GI NetsmartHoldings LLC, Nathan Holding LLC and Andrews Henderson LLC 8-K 2.1 March 23, 2016 2.4 Agreement and Plan of Merger, dated as of March 20, 2016, by andamong Nathan Intermediate LLC, Nathan Merger Co., Netsmart, Inc.and Genstar Capital Partners V, L.P. 8-K 2.2 March 23, 2016 2.5 Purchase Agreement, dated as of August 1, 2017, by and betweenMcKesson Corporation and Allscripts Healthcare, LLC. 8-K 2.1 August 4, 2017 2.6 Amendment No. 1 to Purchase Agreement, dated as of October 2, 2017,by and between McKesson Corporation and Allscripts Healthcare,LLC. 10-Q 2.3 November 9, 2017 2.7 Asset Purchase Agreement, dated as of August 3, 2017, betweenAllscripts Healthcare Solutions, Inc. and NantHealth, Inc. 8-K 2.1 August 31, 2017 3.1 Fifth Amended and Restated Certificate of Incorporation of AllscriptsHealthcare Solutions, Inc. 10-K 3.1 February 29, 2016 3.2 By-Laws of Allscripts Healthcare Solutions, Inc. 8-K 3.1 August 20, 2015 4.1 Indenture dated as of June 18, 2013, between Allscripts HealthcareSolutions, Inc. and Wells Fargo Bank, National Association, as Trustee 8-K 4.1 June 18, 2013 4.2 Form of 1.25% Cash Convertible Senior Note due 2020 (included inExhibit 4.1) 8-K 4.2 June 18, 2013 10.1 Replacement Facility Amendment, dated as of September 30, 2015,among Allscripts Healthcare Solutions, Inc., Allscripts Healthcare,LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., asadministrative agent 8-K 10.1 October 2, 2015 131 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.2 First Amendment, dated as of March 28, 2016, to the Amended andRestated Credit Agreement, among Allscripts Healthcare Solutions,Inc., Allscripts Healthcare, LLC, the lenders party thereto andJPMorgan Chase Bank, N.A., as administrative agent 10-Q 10.4 May 6, 2016 10.3 First Lien Credit Agreement, dated April 19, 2016, by and amongNathan Intermediate LLC, Nathan Merger Co., Andrews HendersonLLC, Netsmart, Inc., Netsmart Technologies, Inc., the subsidiaries ofthe borrowers party thereto, the lenders party thereto, and UBS AG,Stamford Branch, as administrative agent and collateral agent for thelenders party thereto 8-K 10.1 April 25, 2016 10.4 Second Lien Term Loan Agreement, dated April 19, 2016, by andamong Nathan Intermediate LLC, Nathan Merger Co., AndrewsHenderson LLC, Netsmart, Inc., Netsmart Technologies, Inc., thesubsidiaries of the borrowers party thereto, the lenders party thereto,and UBS AG, as administrative agent and collateral agent for thelenders party thereto20160805 8-K 10.2 April 25, 2016 10.5 Amendment to First Lien Credit Agreement and IncrementalAssumption Agreement, dated as of October 27, 2016, by and amongAndrews Henderson LLC, Netsmart, Inc., Netsmart Technologies, Inc.,the subsidiaries of the borrowers party hereto, the lenders party hereto,and UBS AG, as administrative agent thereto. 10-K 10.5 February 27, 2017 10.6 Amendment to First Lien Credit Agreement, dated as of November 10,2016, by and among Andrews Henderson LLC, Netsmart, Inc., NetsmartTechnologies, Inc., the subsidiaries of the borrowers party hereto, thelenders party hereto, and UBS AG, as administrative agent thereto. 10-K 10.6 February 27, 2017 10.7* Nathan Holding LLC Amended and Restated Limited LiabilityCompany Agreement, dated as of April 19, 2016 10-Q 10.3 August 5, 2016 10.8 Amendment No. 1 to Nathan Holding LLC Amended and RestatedLimited Liability Company Agreement, dated as of June 28, 2016 10-Q 10.4 August 5, 2016 10.9 Guarantee and Collateral Agreement, dated as of June 28, 2013, by andamong Allscripts Healthcare Solutions, Inc., Allscripts Healthcare, LLCand certain other subsidiaries party thereto, and JPMorgan Chase Bank,N.A., as administrative agent 8-K 10.2 July 2, 2013 10.10 Convertible note hedge transaction confirmation, dated as of June 12,2013, by and between JPMorgan Chase Bank, National Association,London Branch and Allscripts Healthcare Solutions, Inc. 8-K 10.1 June 18, 2013 10.11 Amendment to convertible note hedge transaction, dated as of June 14,2013, by and between JPMorgan Chase Bank, National Association,London Branch and Allscripts Healthcare Solutions, Inc. 8-K 10.2 June 18, 2013 132 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.12 Convertible note hedge transaction confirmation, dated as of June 12,2013, by and between Citibank, N.A. and Allscripts HealthcareSolutions, Inc. 8-K 10.3 June 18, 2013 10.13 Amendment to convertible note hedge transaction, dated as of June14, 2013, by and between Citibank, N.A., and Allscripts HealthcareSolutions, Inc. 8-K 10.4 June 18, 2013 10.14 Convertible note hedge transaction confirmation, dated as of June 12,2013, by and between Deutsche Bank AG, London Branch andAllscripts Healthcare Solutions, Inc. 8-K 10.5 June 18, 2013 10.15 Amendment to convertible note hedge transaction, dated as of June14, 2013, by and between Deutsche Bank AG, London Branch andAllscripts Healthcare Solutions, Inc. 8-K 10.6 June 18, 2013 10.16 Warrant transaction confirmation, dated as of June 12, 2013, by andbetween JPMorgan Chase Bank, National Association, LondonBranch and Allscripts Healthcare Solutions, Inc. 8-K 10.7 June 18, 2013 10.17 Warrant transaction confirmation, dated as of June 14, 2013, by andbetween JPMorgan Chase Bank, National Association, LondonBranch and Allscripts Healthcare Solutions, Inc. 8-K 10.8 June 18, 2013 10.18 Warrant transaction confirmation, dated as of June 12, 2013, by andbetween Citibank, N.A., and Allscripts Healthcare Solutions, Inc. 8-K 10.9 June 18, 2013 10.19 Warrant transaction confirmation, dated as of June 14, 2013, by andbetween Citibank, N.A., and Allscripts Healthcare Solutions, Inc. 8-K 10.10 June 18, 2013 10.20 Warrant transaction confirmation, dated as of June 12, 2013, by andbetween Deutsche Bank AG, London Branch, and AllscriptsHealthcare Solutions, Inc. 8-K 10.11 June 18, 2013 10.21 Warrant transaction confirmation, dated as of June 14, 2013, by andbetween Deutsche Bank AG, London Branch, and AllscriptsHealthcare Solutions, Inc. 8-K 10.12 June 18, 2013 10.22† Allscripts Healthcare Solutions, Inc., Amended and Restated 1993Stock Incentive Plan (as amended and restated effective October 8,2009) 10-Q 10.3 October 13, 2009 10.23† Allscripts Healthcare Solutions, Inc. 2001 Non-Statutory Stock OptionPlan 10-K 10.19 March 31, 2003 10.24† Amendments to the Allscripts Healthcare Solutions, Inc. 2001Nonstatutory Stock Option Plan 10-Q 10.12 November 10, 2008 10.25† Amended and Restated Allscripts Healthcare Solutions Inc. IncentivePlan 8-K 10.1 May 23, 2014 133 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.26† Allscripts Healthcare Solutions, Inc. Second Amended and Restated2011 Stock Incentive Plan 8-K 10.1 May 24, 2017 10.27† Amended and Restated Allscripts Healthcare Solutions, Inc. DirectorDeferred Compensation Plan 10-Q 10.16 August 9, 2013 10.28† Form of Restricted Stock Unit Award Agreement (Directors) 10-KT 10.37 March 1, 2011 10.29† Form of Restricted Stock Unit Award Agreement (February 2011) 10-KT 10.38 March 1, 2011 10.30† Form of Performance-Based Restricted Stock Unit Award Agreement 10-KT 10.39 March 1, 2011 10.31† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) 10-KT 10.40 March 1, 2011 10.32† Form of Restricted Stock Unit Award Agreement for Non-EmployeeDirectors (2011 Stock Incentive Plan) 10-Q 10.4 August 9, 2011 10.33† Form of Time-Based Vesting Restricted Stock Unit Award Agreementfor Employees (2011 Stock Incentive Plan) 10-Q 10.5 August 9, 2011 10.34† Form of Stock Option Agreement 10-K 10.38 March 1, 2013 10.35† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) 10-K 10.39 March 1, 2013 10.36† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) (February 2014) 10-K 10.29 March 3, 2014 10.37† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) for Paul M. Black 10-K 10.40 March 1, 2013 10.38† Amendment to Performance-Based Restricted Stock Unit AwardAgreement, dated February 25, 2014, between Allscripts HealthcareSolutions, Inc. and Paul M. Black 10-K 10.31 March 2, 2015 10.39† Amendment No. 1 to Performance-Based Restricted Stock Unit AwardAgreement, dated December 24, 2012, between Allscripts HealthcareSolutions, Inc. and Paul M. Black 10-K 10.31 March 3, 2014 10.40† Amendment No. 2 to Performance-Based Restricted Stock Unit AwardAgreement, dated December 24, 2012, between Allscripts HealthcareSolutions, Inc. and Paul M. Black 8-K 99.1 December 31, 2014 10.41† Form of Restricted Stock Unit Award Agreement for Paul M. Black 10-K 10.41 March 1, 2013 10.42† Employment Agreement, dated as of December 19, 2012, betweenAllscripts Healthcare Solutions, Inc. and Paul M. Black 8-K 10.1 December 19, 2012 10.43† Amendment No. 1 to Employment Agreement, effective October 1,2015, between Allscripts Healthcare Solutions, Inc. and Paul M. Black 8-K 10.1 October 7, 2015 134 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.44† Employment Agreement, dated as of October 10, 2012 but effective asof October 29, 2012, between Allscripts Healthcare Solutions, Inc. andRichard Poulton 10-K 10.67 March 1, 2013 10.45† Employment Agreement, dated as of October 10, 2012 but effective asof November 12, 2012, between Allscripts Healthcare Solutions, Inc.and Dennis Olis 10-K 10.39 March 3, 2014 10.46† Employment Agreement, dated as of May 28, 2013, between AllscriptsHealthcare Solutions, Inc. and Brian Farley 10-K 10.40 March 3, 2014 10.47† Employment Agreement, dated as of December 11, 2015, betweenAllscripts Healthcare Solutions, Inc. and James Hewitt 10-K 10.41 February 29, 2016 10.48† Separation Agreement, dated as of May 11, 2017, between AllscriptsHealthcare Solutions, Inc. and Melinda D. Whittington 10-Q 10.2 August 4, 2017 10.49† Employment Agreement, dated as of October 30, 2016, effectiveNovember 1, 2016, between Allscripts Healthcare Solutions, Inc. andLisa Khorey 10-K 10.49 February 27, 2017 12.1 Ratio of Earnings to Fixed Charges X 21.1 Subsidiaries X 23.1 Consent of Grant Thornton LLP X 24.1 Powers of Attorney (included on the signature page hereto) X 31.1 Rule 13a - 14(a) Certification of Chief Executive Officer X 31.2 Rule 13a - 14(a) Certification of Chief Financial Officer X 32.1 Section 1350 Certifications of Chief Executive Officer and ChiefFinancial Officer X 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema X 101.CAL XBRL Taxonomy Extension Calculation Linkbase X 101.LAB XBRL Taxonomy Extension Label Linkbase X 101.PRE XBRL Taxonomy Extension Presentation Linkbase X 101.DEF XBRL Taxonomy Definition Linkbase X *Portions of this exhibit have been omitted pursuant to the Commission’s grant of confidential treatment.†Indicates management contract or compensatory plan. Item 16. Form 10-K Summary None. 135 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized.Date: February 23, 2018 Allscripts Healthcare Solutions, Inc. BY: /S/ PAUL M. BLACK Paul M. BlackChief Executive OfficerPOWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Paul M. Black, Richard J.Poulton and Dennis M. Olis, jointly and severally, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, tosign any amendments to this Annual Report on From 10-K and to file the same, with exhibits thereto and other documents in connections therewith, with theSecurities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do orcause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /S/ PAUL M. BLACK Paul M. Black Chief Executive Officer and Director(Principal Executive Officer) February 23, 2018/S/ DENNIS M. OLIS Dennis M. Olis Chief Financial Officer(Principal Financial and Accounting Officer) February 23, 2018/S/ P. GREGORY GARRISON Director February 23, 2018P. Gregory Garrison/S/ JONATHAN J. JUDGE Jonathan J. Judge Director February 23, 2018/S/ MICHAEL A. KLAYKO Michael A. Klayko Chairman of the Board and Director February 23, 2018/S/ YANCEY L. SPRUILL Yancey L. Spruill Director February 23, 2018 /S/ DAVE B. STEVENS Dave B. Stevens Director February 23, 2018/S/ DAVID D. STEVENS David D. Stevens Director February 23, 2018/S/ MARA G. ASPINALL Director February 23, 2018Mara G. Aspinall/S/ RALPH H. “RANDY” THURMAN Ralph H. “Randy” Thurman Director February 23, 2018 136 Exhibit 12.1RATIO OF EARNINGS TO FIXED CHARGES Year Ended December 31, (In thousands) 2016 2015 2014 2013 2012 Income (loss) before income taxes $(14,784) $570 $(68,117) $(148,346) $(17,460)Plus fixed charges: Interest expense 46,376 16,284 16,020 14,703 11,121 Amortization of discounts and debt issuance costs 16,541 13,679 13,277 9,451 5,066 Write off of unamortized deferred debt issuance costs 5,224 1,433 0 3,901 0 Portion of rents representative of an appropriate interest factor 8,240 6,049 5,414 5,682 6,175 Total fixed charges (1) $76,381 $37,445 $34,711 $33,737 $22,362 Adjusted earnings (2) $61,597 $38,015 $(33,406) $(114,609) $4,902 Ratio (2 divided by 1) 0.8 1.0 (1.0) (3.4) 0.2 Fixed charges deficiency $14,784 $0 $68,117 $148,346 $17,460 EXHIBIT 21.1ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.SUBSIDIARIES Subsidiary Jurisdiction orState ofOrganizationAllscripts Holdings, LLC Delaware Allscripts Holdings 2, LLC Delaware Coniston Exchange, LLC Delaware Allscripts Healthcare US, LP Delaware Allscripts Healthcare, LLC North Carolina Allscripts Managed Services, LLC Delaware Allscripts Software, LLC Delaware Allscripts Analytics, LLC Delaware Allscripts Next, LLC Delaware 2bPrecise, LLC Delaware 2bPrecise Ltd. Israel PF2 EIS LLC Delaware Nathan Holding LLC Delaware PF2 Enterprise Information Solutions Canada Canada Allscripts Canada Corporation Canada Allscripts Healthcare IT (Canada) Corporation (f/k/a NantHealth Canada, Inc.) Canada Allscripts Healthcare International Holdings, LLC Delaware Allscripts (Mauritius) Limited Mauritius Allscripts (India) LLP India Nant Health Technologies Private Limited India Allscripts Healthcare IT (Malaysia) SDN. BHD. Malaysia Allscripts Healthcare IT (Singapore) PTE. LTD. Singapore Allscripts Healthcare IT (Australia) PTY. LTD. Australia Allscripts Healthcare (IT) UK LTD. United Kingdom Allscripts (United Kingdom) Limited United Kingdom dbMotion, Ltd. Israel dbMotion, Inc. Delaware Allscripts IHC, LLC Delaware Careport Health, LLC. North Carolina Allscripts C.V. Netherlands Allscripts B.V. Netherlands Allscripts Healthcare IT (Mauritius) Limited Mauritius Core Medical Solutions Holdings PTY LTD. Australia Core Medical Solutions PTY LTD. Australia Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated February 23, 2018, with respect to the consolidated financial statements and internalcontrol over financial reporting included in the Annual Report of Allscripts Healthcare Solutions, Inc. on Form 10-K for the year endedDecember 31, 2017. We consent to the incorporation by reference of said reports in the Registration Statements of AllscriptsHealthcare Solutions, Inc. on Forms S-8 (File No. 333-37238, File No. 333-90129, File No. 333-104416, File No. 333-59212, File No.333-135282, File No. 333-141600, File No. 333-154775, File No. 333-167846, File No. 333-175053, File No. 333-175819, File No.333-188902, File No. 333-196415 and File No. 333-2181174) and on Form S-3 (File No. 333-188901). /s/ GRANT THORNTON LLPRaleigh, North CarolinaFebruary 23, 2018 Exhibit 31.1CERTIFICATIONI, Paul M. Black, certify that: 1.I have reviewed this Annual Report on Form 10-K of Allscripts Healthcare Solutions, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting. Date: February 23, 2018 /s/ Paul M. Black Chief Executive Officer Exhibit 31.2CERTIFICATIONI, Dennis M. Olis, certify that: 1.I have reviewed this Annual Report on Form 10-K of Allscripts Healthcare Solutions, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and 5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting. Date: February 23, 2018 /s/ Dennis M. Olis Chief Financial Officer Exhibit 32.1 The following statement is being made to the Securities and Exchange Commission solely for purposes of Section 906 of the Sarbanes-Oxley Act of 2002(18 U.S.C. 1350), which carries with it certain criminal penalties in the event of a knowing or willful misrepresentation.Securities and Exchange Commission450 Fifth Street, NWWashington, D.C. 20549Re: Allscripts Healthcare Solutions, Inc.Ladies and Gentlemen:In accordance with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1350), each of the undersigned hereby certifies that:(i) this Annual Report on Form 10-K for the year ended December 31, 2017, which this statement accompanies, fully complies with the requirements ofsection 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and(ii) the information contained in this Annual Report on Form 10-K for the year ended December 31, 2017, fairly presents, in all material respects, the financialcondition and results of operations of Allscripts Healthcare Solutions, Inc.Date: February 23, 2018 /S/ PAUL M. BLACK /S/ DENNIS M. OLIS Paul M. BlackChief Executive Officer Dennis M. OlisChief Financial OfficerA signed original of this written statement required by Section 906 has been provided to Allscripts Healthcare Solutions, Inc. and will be retained byAllscripts Healthcare Solutions, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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