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Worldwide Healthcare Trust PLCUNITED 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, 2018or☐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)(800) 334-8534(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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 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 ☐ 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 29, 2018, the last business day of the registrant’s most recently completed second fiscal quarter, was $2,055,742,140. 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 20, 2019, there were 171,331,796 shares of the registrant’s common stock issued and outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement related to its 2019 annual meeting of stockholders (the “2019 Proxy Statement”) are incorporated by reference into PartIII of this Annual Report on Form 10-K where indicated. The 2019 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, 2018 Item Page PART I 1. Business 31A. Risk Factors 121B. Unresolved Staff Comments 282. Properties 283. Legal Proceedings 284. Mine Safety Disclosures 28 PART II 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 296. Selected Financial Data 317. Management’s Discussion and Analysis of Financial Condition and Results of Operations 337A. Quantitative and Qualitative Disclosures About Market Risk 548. Financial Statements and Supplementary Data 559. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 1159A. Controls and Procedures 115 PART III 10. Directors, Executive Officers and Corporate Governance 11611. Executive Compensation 11612. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 11613. Certain Relationships and Related Transactions and Director Independence 11614. Principal Accountant Fees and Services 116 PART IV 15. Exhibits and Financial Statement Schedules 117 16. Form 10-K Summary 121 2 Each of the terms “we,” “us,” “our” or “company” as used herein refers collectively to Allscripts Healthcare Solutions, Inc. (“Allscripts”) and/or itswholly-owned subsidiaries 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. BusinessWe deliver information technology (“IT”) solutions and services to help healthcare organizations achieve optimal clinical, financial and operationalresults. 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, helps clients advance the quality andefficiency of healthcare by providing electronic health records (“EHR”), financial management, population health management, precision medicine andconsumer solutions. Built on an open integrated platform, our solutions enable users to streamline workflows, leverage functionality from other softwarevendors and exchange data. The Allscripts Developer Program focuses on nurturing partnerships with other developers to help clients optimize the value oftheir Allscripts investment.We completed the acquisition of Practice Fusion, Inc., a Delaware corporation (“Practice Fusion”) in February 2018. Practice Fusion offers anaffordable certified cloud-based EHR for traditionally hard-to-reach small, independent physician practices. This acquisition is now a part of Veradigm™, ournewly launched payer and life sciences business unit. An integrated data systems and services provider, Veradigm combines data-driven clinical insights withactionable tools for clinical workflow, research, analytics and media. 3 In February 2018, Allscripts also announced its new EHR, Avenel™. Mobile-first and cloud-based, Avenel creates a communitywide, shared patientrecord, using machine learning to reduce time for clinical documentation, all while designed to work like an app instead of traditional software.In March and April 2018, we closed the sales of our Strategic Sourcing and OneContent businesses, respectively. Allscripts acquired these businessesin late 2017 through the acquisition of McKesson Corporations Enterprise Information Solutions (“EIS”) portfolio (the “EIS Business”).In May 2018, we acquired all the capital stock of Health Grid Holding Company, a Delaware corporation (“Health Grid”). Health Grid is a patientengagement solutions provider that helps independent providers, hospitals and health systems improve patient interactions and satisfaction. We areintegrating the capabilities of Health Grid into our FollowMyHealth® platform to help organizations address consumerism trends while enabling them toreach 100% of their patient populations without requiring their patients to sign into a portal. The new functionality will use existing patients’ contactinformation and grow the use of FollowMyHealth® to connect providers with patients and create opportunities to reach new heights of patient outreach andengagement.We established a partnership with Lyft, Inc. (“Lyft”) in May 2018. Lyft is the fastest growing rideshare company in the United States and will enablenon-emergency transportation options to appear directly in the physician’s workflow. Leveraging Lyft’s proprietary application programming interface(“API”) and Allscripts Open platform, Allscripts and Lyft will integrate this functionality into Sunrise™ EHR, to enable clinicians to order the Lyft service forpatients.On December 31, 2018, we sold our investment in Netsmart LLC (“Netsmart”) in exchange for $566.6 million in cash, resulting in a pre-tax gain of$500 million. Prior to the sale, Netsmart comprised a separate reportable segment, which due to its significance to our historical consolidated financialstatements and results of operations, is reported as a discontinued operation as a result of the sale.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 drive smarter care across connected communities of health. Acrosscare settings, our solutions enable clinical, financial and operational efficiencies while helping patients deepen their engagement in their own care. Ourprincipal solutions consist of the following:Electronic Health RecordsAllscripts offers a suite of EHRs for hospitals and health systems, as well as community and physician practices. Built on an open platform withadvanced clinical decision support, our EHRs provide analysis and insights. Our EHR solutions deliver a single patient record, workflows and consolidatedanalytics. Our innovative solutions help deliver improved patient care and outcomes. Our EHR solutions consist of the following:Sunrise™ is a comprehensive EHR platform for larger hospital facilities with a combination of services lines. Sunrise supports health systems on asingle platform for both inpatient and outpatient care and provides decision guidance, including computerized provider order entry, note and flowsheetdocumentation, clinical summary views and other key workflows necessary for driving quality care. Administrative and operational modules are likewiseavailable. Functionality is also offered on mobile devices. Offerings include: •Sunrise™ Acute Care •Allscripts® Census Logic •Sunrise™ Ambulatory Care •Allscripts® Surgical Logic •Sunrise™ Mobile •Allscripts Patient Flow™ •Sunrise™ Surgical Care •Sunrise™ Oncology •Sunrise™ Rehabilitation •Allscripts® Clinical Performance Management •iPro Anesthesia •Sunrise™ Financial Manager •Sunrise™ Wound Care powered by TRUE-see™ •Sunrise™ Health Information Management •Sunrise™ Emergency Care •Sunrise™ Radiology •Sunrise™ Access Manager •Sunrise™ Patient Administration System (international) •Sunrise™ Pharmacy •Sunrise™ Abstracting •Allscripts® Infusion Logic •Sunrise™ Charge Logic 4 Paragon® is an integrated clinical, financial and administrative EHR solution tailored for community hospitals and health systems. Once part of theMcKesson EIS portfolio, the solution supports the full scope of care delivery and business processes, from patient access management and accountingthrough clinical assessment, documentation and treatment.Allscripts TouchWorks® EHR is an EHR solution for larger single and multispecialty practices and is built on an open platform that brings datasources together. This open platform feature, along with the ability to customize workflows, enables clinical staff to effectively coordinate and deliver bothprimary and specialized care. Functionality is also offered on mobile devices.Allscripts Professional EHR™ is an EHR solution for small- to mid-size physician practices. Allscripts Professional EHR works in accountable careorganizations (“ACOs”), patient-centered medical homes and Federally Qualified Health Centers, and enables practices to adhere to government initiativeslike Meaningful Use and the Medicare Access and CHIP Reauthorization Act or Merit based Incentive Payment System (“MIPS”). The solution’s mobileoffering, Allscripts Professional EHRTM Mobile, provides on-the-go access to Allscripts Professional EHR, driving greater efficiency and improved patientcare.Payer and Life SciencesVeradigm™ is the newly branded Allscripts payer and life science business unit. An integrated data systems and services business, it combines data-driven clinical insights with actionable tools for clinical workflow, research, analytics and media. Its solutions help key healthcare stakeholders improve thequality, efficiency and value of healthcare delivery—from biopharma to health plans, healthcare providers, health technology partners, and most importantly,the patients they serve.Consumer SolutionsFollowMyHealth® is a comprehensive patient engagement platform with options for telehealth and remote patient monitoring. This patientengagement platform, enhanced by the addition of powerful Health Grid functionality, also serves as the foundation for emerging consumer health initiatives,including automated secure messaging.Financial ManagementAllscripts financial solutions support revenue cycle, claims management, budgeting and analytic functions for healthcare organizations. These toolscan help change clinician behavior to improve patient flow, increase quality, advance outcomes, optimize referral networks, decrease leakage and reducecosts. Plus, our solutions allow our clients to extract the data needed to support new reimbursement models. Offerings include: •Sunrise™ Financial Manager •Allscripts EPSI •Sunrise™ Abstracting •Allscripts Payerpath® •Allscripts Revenue Cycle Management Services •STARPopulation 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 solutions include Allscripts® Care Director, CarePort Care Management, dbMotion™ Care Coordination Agent,Allscripts® Referral Management and chronic care management services. •Our connectivity and data aggregation solutions include the dbMotion™ Solution, dbMotion™ Community powered by OnePartner and AllscriptsFusion™. •Allscripts Population Health Analytics™ enables healthcare organizations to measure performance and outcomes, analyze utilization, manage risk,reduce cost and improve quality across the continuum of care.Precision MedicineThrough 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™ seeks to bring the intelligence and insights of precision medicine to the workflow of the clinician—while making this knowledge available for research and pharmacogenomics.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. We provide the following services and more: 5 •Allscripts® Architecture Advisory Service •Allscripts® Proactive Application Monitoring Service •Allscripts® Clinical Quality Program •Allscripts® FollowMyHealth Engagement and Optimization •Allscripts® Premier Support •Allscripts® Revenue Cycle Consulting ServicesOur StrategyOur strategy is built upon our vision of enabling smarter care at virtually every point of the healthcare continuum. Given the breadth of our portfolioand global client base, we believe we are well positioned to connect providers to patients and payers across all healthcare settings. Smarter care is a strategicimperative for healthcare organizations globally and requires a balance between managing costs while maintaining the highest quality of care. We believeour solutions are positioned to facilitate such transformation in healthcare delivery by connecting communities, driving interoperability, providing dataanalytics and delivering consumer engagement features and functionality. These key strategic areas all help healthcare providers better manage populationsof patients, especially those with costly chronic conditions, such as diabetes, asthma and heart disease, to help bring down the cost of care and improvepatient outcomes. •Connecting communities – Our care coordination solutions improve safety and quality as a patient transitions from one care setting toanother. To do so, care coordination solutions help build assessments, monitor results, track outcomes and make modifications in apatient’s care plan. Healthcare is a group effort, and having full visibility into a patient’s care plan is critical. Access to comprehensivepatient information is key, and our community solutions help create an organized, longitudinal patient record spanning all points of care. •Interoperability – We provide clients a wide array of interoperability tools to support their need and desire to connect to numerousstakeholders in the industry, including other healthcare providers, labs, imaging facilities, public health entities and patients, as well asother third-party technology providers. Allscripts Open platform is proven, scalable and user-friendly, and connects both clinical andfinancial data across every setting. We also offer APIs based on the Fast Healthcare Interoperability Resources. With this platform, clientscan connect to any certified application or device, which saves time and money and gives clients full access to a variety of innovativesolutions. •Data analytics – Allscripts understands that healthcare organizations need to analyze dependencies, trends and patterns so that they candevelop business and clinical intelligence. Our analytics offerings help organizations better manage their patient populations by usingclean data for better decisions at the point of care. Insights and analytics serve as the foundation for informed analysis and effectiveplanning. •Consumer engagement – Our patient engagement software helps healthcare organizations achieve better outcomes, reduce emergencyroom visits and decrease hospitalizations. Our solutions also integrates with health IT offerings across an organization, regardless of aprovider’s chosen vendor. With a patient engagement platform, individuals and their families have the opportunity to become activemembers of their care team, which improves results. •Payer and life sciences – Through Veradigm™, we are positioned to help clients manage the evolution toward value-based care, facilitatepatient medication access and affordability and provide new, efficient operating models for generating the real-world evidence necessaryto accelerate the development of new therapies and to enhance the value of existing ones. 6 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, including among others, the Medicare Access and CHIP Reauthorization Act (“MACRA”), the Health Information Technology for Economic andClinical Health Act (“HITECH”), the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), regulations issued by the Centers for Medicareand Medicaid 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 haslead to increasing pressure on healthcare organizations to reduce costs and increase quality, replacing fee-for-service models in part byexpanding advanced payment models. Such changes to provider payment models could further encourage the adoption of healthcare IT as ameans of improving quality of patient care through increased efficiency, care coordination, and improving access to complete medicaldocumentation. 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 programsare being adjusted in part by HHS under the Trump Administration, significant levels of reimbursements will still require providers tocapture, communicate, measure and share outcomes through technology solutions such as ours, given that those requirements are setout 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. Effective on January 1, 2017, the MIPS, established by the Medicare Access and CHIP Reauthorization Actof 2015 (“MACRA”), came into effect. Its goal was to transform the healthcare industry from a fee for service payment to a value-based payment.MIPS combined three existing quality and value reporting programs (PQRS, VBM and Meaningful Use) into a single points-based program.MIPSs and Meaningful Use Stage 3 operated simultaneously in 2017 and 2018 but in 2019 only certain Medicaid reporters are eligible for theMeaningful Use Stage 3 incentives. Eligible clinicians, who report under MIPS, will earn a performance-based payment adjustment for theirMedicare payments starting in 2019. •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, andhealthcare clearinghouses, as well as business associates that performed functions on behalf of or provide services to Covered Entities. Weconsider ourselves a Covered Entity because we act as a “healthcare clearinghouse” through our provision of Allscripts Payerpath, which has theability to file electronic healthcare claims on behalf of healthcare providers that are subject to HIPAA and HITECH. In addition, as a result of ourdealings with 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 7 or disclosures of the information, including to individuals and governmental authorities and (iii) assist Covered Entities from which we obtainhealth information with certain of their duties under HIPAA. We have policies and safeguards in place intended to protect health information asrequired by HIPAA and have processes in place to assist us in complying with applicable laws and regulations regarding the protection of thisdata and responding to any security incidents. The Office of Civil Rights is currently considering updates and changes to HIPAA-relatedregulations, and we will adjust our processes and procedures as necessary, should any new rules be promulgated. •ANSI-5010/ICD-10: Under HIPAA, HHS implemented a new version of the standards for HIPAA-covered electronic transactions, includingclaims, remittance advices, and requests and responses for eligibility, which is called ANSI-5010. Additionally, HIPAA required entities toupgrade to the tenth revision of the International Statistical Classification of Diseases and Related Health Problems from the World HealthOrganization, also known as ICD-10, for use in reporting medical diagnoses and inpatient procedures by no later than October 1, 2015. Thesechanges 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 we 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 or MIPScriteria. •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. While such repeal is unlikely, given the divided Congress following the 2018 midtermelection, the Administration may continue to take steps through regulation and executive order to break down components of the PPACApreviously implemented. Many components of the law, including those which have had a positive effect by requiring the expanded use ofproducts such as ours to participate in certain federal programs, are expected to remain in effect, however. Certain provisions of PPACA, such asthose mandating reductions in reimbursement for certain types of providers or decreasing the number of covered lives in the United States or thedepth of insurance coverage available to patients, may have a negative effect by reducing the resources available to our current and prospectiveclients to purchase our products. Further, some ambiguity remains for the industry as a whole regarding the future of programs initiallyauthorized by the PPACA, which may continue to slow purchasing decisions as healthcare organizations 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. The Administration continues to apply pressure through a variety of levers toincrease interoperability in the industry across a variety of stakeholders, including implementing regulations that increasingly require robust, sophisticatedhealth technology. For example, although many large physician groups have already purchased EHR technology, we expect those groups may choose toreplace their older EHR technology to comply with future Quality Payment Program requirements and to add new features and functionality. Further,opportunities for healthcare provider organizations to expand their care coordination efforts in order to successfully comply with new payment programs orto add software specific to the precision medicine expansion, as outlined in the 21st Century Cures Act passed in December 2016, could lead to additionaldemand for our solutions. We also seek replacement markets for health information exchanges and patient portals, despite their recent deployment. 8 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.During 2018, in an effort to further streamline and align our operating structure around our key acute and population health management solutions, wemade several changes to our organizational and reporting structure. Refer to Note 17, “Business Segments,” to our consolidated financial statements includedin Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for detailed discussion about these changes. As a result of these changes,as of December 31, 2018, we had eight operating segments. These segments, with exception of the 2Precise operating segment, are aggregated into tworeportable segments, as follows: •The Clinical and Financial Solutions reportable segment includes the Hospitals and Health Systems, Ambulatory, Veradigm, and EIS-Classicsstrategic business units, each of which represents a separate operating segment. This reportable segment derives its revenue from the sale ofintegrated clinical software applications and financial and information solutions, which primarily include EHR-related software, connectivityand coordinated care solutions, financial and practice management software, related installation, support and maintenance, outsourcing, privatecloud hosting, revenue cycle management, training and electronic claims administration services. •The Population Health reportable segment is comprised of three separate operating segments: Careport, FollowMyHealth® and EPSiTM. Thisreportable segment derives its revenue from the sale of health management, financial management and patient engagement solutions, which aremainly targeted at hospitals, health systems, other care facilities and Accountable Care Organizations (“ACOs”).The results of operations related to two of the product offerings acquired with the EIS Business (Horizon Clinicals and Series2000 Revenue Cycle) arepresented throughout these financial statements as discontinued operations and are included in the Clinical and Financial Solutions reportable segment,except for acquisition-related deferred revenue adjustments, which are included in “Unallocated Amounts”. Refer to Note 16, “Discontinued Operations” toour consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.ClientsOur clients include physician practices, hospitals and coordinated community care organizations, which include some of the most prestigious medicalgroups and hospitals in the United States and often serve as reference sources for prospective clients that are interested in purchasing our solutions. No singleclient accounted for more than 10% of our revenue in the years ended December 31, 2018, 2017 and 2016.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.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.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. We believe we competefavorably on these metrics and are one of the leading companies offering a suite of healthcare IT solutions. 9 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., Availity,Cerner Corporation, Change Healthcare, CPSI (Computer Programs and Systems Inc.), CureMD Healthcare, eClinicalWorks, Enli Health Intelligence, EpicSystems Corporation, Evolent Health, Greenway Medical Technologies, Harris Healthcare, Healthagen, Health Catalyst, IBM Watson Health, Inovalon,IQVIA, Kareo, The Lash Group, Inc., MEDHOST, Inc., Meditech (Medical Information Technology, Inc.), NaviHealth, Nextgen, nThrive, Optum, PhilipsHealthcare, Premier Inc., Science 37, Strata, T-System, The TriZetto Group, Inc. (a division of Cognizant Technology Solutions, Inc.), Waystar and WellsoftCorporation.BacklogWe had a contract backlog of $3.9 billion and $4.2 billion as of December 31, 2018 and 2017, respectively, a decrease of 7%. Contract backlogrepresents the value of bookings and support and maintenance contracts that have not yet been recognized as revenue. Total contract backlog can fluctuatebetween periods based on the level of revenue and bookings as well as the timing and mix of renewal activity and periodic revalidations. We estimate thatapproximately 38% of our aggregate contract backlog as of December 31, 2018 will be recognized as revenue during 2019.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.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.EmployeesAs of December 31, 2018, we had approximately 9,500 employees worldwide. None of our employees are covered by a collective bargainingagreement or are represented by a labor union. 10 Executive OfficersThe following sets forth certain information regarding our executive officers as of February 22, 2019, based on information furnished by each of them: Name Age PositionPaul Black 60 Chief Executive OfficerBrian Farley 49 Executive Vice President, General Counsel and Chief Administrative OfficerLisa Khorey 52 Executive Vice President, Chief Client Delivery OfficerDennis Olis 56 Chief Financial OfficerRichard Poulton 53 PresidentPaul 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.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 SEC maintains an Internet site that contains reports, proxy and information statements, andother information regarding issuers that file electronically with the SEC (http://www.sec.gov). 11 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.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 Allscripts HER product with that already in use in the larger enterprise. Any of these factors couldmaterially and adversely impact our business, financial condition and operating results. 12 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.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. 13 We believe we are a Covered Entity because we act as a “healthcare clearinghouse” through our provision of Allscripts Payerpath which has theability to file electronic healthcare claims on behalf of healthcare providers that are subject to HIPAA and HITECH. We also believe that in certain businessrelationships we are a Business Associate. The 2013 modifications to the HIPAA Privacy, Security, Breach Notification, and Enforcement Rules imposeadditional obligations and burdens on Covered Entities, Business Associates and their subcontractors relating to the privacy and security of PHI. Much of thePrivacy Standards and all of the Security Standards now apply directly to Business Associates and their subcontractors. These 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.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. 14 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 implemented the Medicare Access and CHIPReauthorization Act (“MACRA”); for ambulatory clinicians further reducing the impact of MIPPA. Effective on January 1, 2017, the Merit based IncentivePayment System (“MIPS”), established by MACRA, came into effect. Its goal was to transform the healthcare industry from a fee for service payment to avalue-based payment. MIPS combined three existing quality and value reporting programs (PQRS, VBM and Meaningful Use) into a single points-basedprogram. MIPSs and Meaningful Use Stage 3 operated simultaneously in 2017 and 2018 but in 2019 only certain Medicaid reporters are eligible for theMeaningful Use Stage 3 incentives. Eligible clinicians, who report under MIPS, will earn a performance-based payment adjustment for their Medicarepayments starting in 2019. In general, regulations in this area impose certain requirements which can be burdensome and evolve regularly, meaning that any potential benefitsmay be reversed by a newly-promulgated regulation that adversely affects our business model. Aspects of our clinical products are affected by suchregulation because of our need to include features or functions in our products to achieve certification, as well as the need of our clients to comply, asdiscussed above, and we expect this will continue for the foreseeable future.We may also be 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.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 were focused on improving the interoperability of EHR systems in different practices and are intended to bring aboutadvancements in care delivery by requiring more advanced EHR 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 were required to meet the Stage 3 objectives in 2018 forthe entire calendar year in order to attest to Meaningful Use. Effective on January 1, 2017, the MIPS, established by MACRA, came into effect. Its goal was totransform the healthcare industry from a fee for service payment to a value-based payment. MIPS combined three existing quality and value reportingprograms (PQRS, VBM and Meaningful Use) into a single points-based program. MIPSs and Meaningful Use Stage 3 operated simultaneously in 2017 and2018 but in 2019 only certain Medicaid reporters are eligible for the Meaningful Use Stage 3 incentives. Eligible clinicians, who report under MIPS, willearn a performance-based payment adjustment for their Medicare payments starting in 2019.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. 15 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.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. 16 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.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. 17 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 than we expect to decide whether to purchase our solutions, our selling expenses could increase and our revenues coulddecrease, which could materially and adversely impact our business, financial condition and operating results. If clients take longer than we expect toimplement our solutions, our recognition of related revenue would be delayed, which could also materially and adversely impact our business, financialcondition 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. 18 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.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 acquisitions of the EIS Business, the provider and patient engagement solutions business of NantHealth, Practice Fusion and HealthGrid. 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. 19 In addition, prior to their acquisition by us, the EIS Business received a request for documents and information from the U.S. Attorney’s Officepursuant to a civil investigative demand (a “CID”). The CID relates 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. In August 2018, anadditional CID seeking similar information related to a separate EIS Business solution. If either CID leads to a claim or legal proceeding against us or ourbusinesses that results in the imposition of damages, non-monetary relief, significant compliance, litigation or settlement costs or any other losses, in eachcase for which we are not indemnified by the seller of the acquired business, or are otherwise unable to recover against the seller, such damages, relief, costs orlosses 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 CID. Subsequent to our acquisition by us, Practice Fusion received additional requests for documents and informationpursuant to additional CIDs and HIPAA subpoenas. These requests relate to the certification of Practice Fusion’s software under the U.S. Department of Healthand Human Services’ Electronic Health Record Incentive Program, compliance with the Anti-Kickback Statute, and related business practices. PracticeFusion produced documents responsive to these requests in a cooperative, thorough and timely manner. If any of these requests lead to a claim or legalproceeding against Practice Fusion that results in the imposition of damages, non-monetary relief, significant compliance, litigation or settlement costs, orany other losses, such damages, relief, costs or losses could materially and adversely impact our business, 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.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; •misreporting by clients of eCOMs and other measures.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. 20 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.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 and other requests related to PracticeFusion and the EIS Business and those discussed under Note 20, “Contingencies,” to our consolidated financial statements included in Part II, Item 8,“Financial Statements and Supplementary Data” of this Form 10-K, and additional claims may arise in the future. For example, companies in our industry,including many of our competitors, have been subject to litigation based on allegations of patent infringement or other violations of intellectual propertyrights. In particular, patent holding companies often engage in litigation seeking to monetize patents that they have purchased or otherwise obtained. As thenumber of competitors, patents and patent holding companies in our industry increases, the functionality of our products and services expands, and we enterinto new geographies and markets, the number of intellectual property rights-related actions against us has increased and is likely to continue to increase. Weare vigorously defending 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. 21 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.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. 22 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. In 2018, 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.Changes to the healthcare regulatory landscape could force us 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. 23 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.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. 24 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. Our future effective tax rates could also be affected by changes in the mix ofour earnings in countries with differing statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, or changes in tax laws or theirinterpretation, including changes in tax laws affecting our products and services and the healthcare industry more generally. We are also subject to theexamination of our tax returns and other documentation by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of anadverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome ofthese examinations or that our assessments of the likelihood of an adverse outcome will be correct. If our effective tax rates were to increase, particularly inthe United States, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, then this could materially andadversely 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.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. 25 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.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 Second Amended Credit Agreement (as defined under Note 8, “Debt,” to ourconsolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K) may require usto repay all indebtedness 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. 26 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.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 Second Amended Credit Agreement and the Indenture each contain, and any future indebtedness would likely contain, a number of restrictivecovenants that impose significant operating and financial restrictions on us, including restrictions on our ability to take actions that may be in our bestinterests. Additionally, the Second Amended Credit Agreement requires us to satisfy and maintain specified financial ratios. Our ability to meet thosefinancial ratios can be affected by events beyond our control, and we may not be able to continue to meet those ratios. A breach of any of these covenantscould result in an event of default under the Second Amended 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 Second Amended Credit Agreement, and thelenders under the Second Amended 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. 27 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 8, “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.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 Note8, “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, 2018, 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 20, “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. 28 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.”Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity SecuritiesOn August 2, 2018, we announced that our Board approved a new stock purchase program (the “2018 Program”) under which we may repurchase upto $250 million of our common stock through December 31, 2020. We repurchased 3.6 million shares of our common stock under the 2018 Program for atotal of $37.0 million during the fourth quarter of 2018. Any future stock repurchase transactions may be made through open market transactions, blocktrades, privately negotiated transactions (including accelerated share repurchase transactions) or other means, subject to our working capital needs, cashrequirements for investments, debt repayment obligations, economic and market conditions at the time, including the price of our common stock, and otherfactors that we consider relevant. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.(In thousands, except per share amounts) Total Number Approximate Of Shares Dollar Value Purchased Of Shares As Part Of That May Yet Total Average Publicly Be Purchased Number Price Announced Under The Of Shares Paid Per Plans Or Plans Or Period (Based on Trade Date) Purchased Share Programs Programs 10/01/18—10/31/18 0 $0.00 0 $250,000 11/01/18—11/30/18 2,235,225 $10.20 2,235,225 $227,193 12/01/18—12/31/18 1,396,941 $10.12 1,396,941 $213,050 3,632,166 $10.17 3,632,166 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 8, “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 20, 2019, there were 369 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. 29 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, 2013 through December 31, 2018, 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. 2013 2014 2015 2016 2017 2018 Allscripts Healthcare Solutions, Inc. 100.00 82.60 99.48 66.04 94.11 62.35 Nasdaq Composite 100.00 114.62 122.81 133.19 172.11 165.84 Nasdaq Health Services 100.00 123.14 134.70 110.22 131.32 155.16 30 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, 2018, 2017 and 2016 and the balance sheet data as of December 31, 2018 and 2017 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, 2015 and 2014 and thebalance sheet data as of December 31, 2016, 2015 and 2014 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) 2018(1) 2017(2) 2016(3) 2015(4) 2014 Consolidated Statements of Operations Data: Revenue $1,749,962 $1,497,708 $1,386,069 $1,386,393 $1,377,873 Cost of revenue 1,025,419 864,909 784,770 805,828 831,889 Gross profit 724,543 632,799 601,299 580,565 545,984 Selling, general and administrative expenses 450,967 400,688 334,521 339,175 358,681 Research and development 268,409 202,282 178,534 184,791 192,821 Asset impairment charges 58,166 0 4,650 1,544 2,390 Goodwill impairment charge 13,466 0 0 0 0 Amortization of intangible and acquisition-related assets 26,587 17,345 15,884 23,172 31,280 Income (loss) from operations (93,052) 12,484 67,710 31,883 (39,188)Interest expense (50,914) (37,540) (29,478) (31,396) (29,297)Other income (loss), net 74 (512) 829 2,183 766 Gain on sale of businesses, net 172,258 0 0 0 0 Impairment of and losses on long-term investments (15,487) (165,290) 0 0 0 Equity in net income (loss) of unconsolidated investments 259 821 (7,501) (2,100) (398)Income (loss) from continuing operations before income taxes 13,138 (190,037) 31,560 570 (68,117)Income tax (provision) benefit (469) 5,514 (309) (2,626) 1,664 Income (loss) from continuing operations, net of tax 12,669 (184,523) 31,251 (2,056) (66,453)Loss from discontinued operations (72,836) (11,915) (46,344) 0 0 Gain on sale of Netsmart 500,471 0 0 0 0 Income tax effect on discontinued operations (32,497) 42,263 18,123 0 0 Income (loss) from discontinued operations, net of tax 395,138 30,348 (28,221) 0 0 Net income (loss) 407,807 (154,175) 3,030 (2,056) (66,453)Less: Net loss (income) attributable to non-controlling interest 4,527 1,566 (146) (170) 0 Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations (48,594) (43,850) (28,536) 0 0 Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $363,740 $(196,459) $(25,652) $(2,226) $(66,453) Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share: Basic: Continuing operations $0.10 $(1.02) $0.17 $(0.01) $(0.37)Discontinued operations $1.97 $(0.07) $(0.31) $0.00 $0.00 Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $2.07 $(1.09) $(0.14) $(0.01) $(0.37) Diluted: Continuing operations $0.10 $(1.02) $0.17 $(0.01) $(0.37)Discontinued operations $1.94 $(0.07) $(0.31) $0.00 $0.00 Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $2.04 $(1.09) $(0.14) $(0.01) $(0.37)_____________________(1) Results of operations for the year ended December 31, 2018 include the results of operations of: (i) Health Grid Holding Company subsequent to the date of acquisition, whichwas May 18, 2018 and (ii) Practice Fusion, Inc., subsequent to the date of acquisition, which was February 13, 2018. 31 (2) 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; and (ii) NantHealth’s patient/provider engagement solutions business for the period subsequent to the date of acquisition, which wasAugust 25, 2017(3)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, which wasDecember 2, 2016; (ii) a third party for the period subsequent to the date of acquisition, which was October 14, 2016; and (iii) a third party for the period subsequent to the dateof acquisition of a controlling interest, which was September 8, 2016.(4) 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 a majorityinterest, which was April 17, 2015. As of December 31, (In thousands) 2018 2017 2016 2015 2014(1) Consolidated Balance Sheet Data: Cash, cash equivalents and restricted cash $184,795 $130,994 $71,545 $116,873 $54,478 Working capital (deficit) 61,235 (32,515) (62,610) 25,389 (34,183)Goodwill and intangible assets, net 1,804,825 1,728,320 1,584,542 1,570,247 1,604,108 Total assets 3,181,484 4,230,150 3,832,159 2,681,948 2,464,330 Long-term debt 647,539 906,725 717,853 612,405 539,193 Total stockholders’ equity 1,580,427 1,160,072 1,273,201 1,419,073 1,284,220_____________________(1)The balance sheet data as of December 31, 2014 has been restated and reflects the retrospective adoption of ASU 2015-03, Simplifying the Presentation of Debt IssuanceCosts and ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. 32 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 Overview 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 thatis rapidly 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. Atthe same time, practitioners worldwide are also under growing 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 Quality PaymentProgram (“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. Additionally, there is a small but growing portionof the market interested in payment models not reliant on insurance, such as the direct primary care model, with doctors and other healthcare professionalsinterested in the clinical value of the interoperable EHR separate and apart from payment mechanisms established by public or commercial payers orassociated reporting requirements.We believe our solutions are delivering value to our clients by providing them with powerful connectivity, as well increasingly robust patientengagement and care coordination tools, enabling users to successfully participate in alternative payment models that reward high value care delivery.Population health management is commonly viewed as one of the critical next frontiers in healthcare delivery, and we expect this rapidly emerging area to bea key driver 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.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 alternative payment models that reward high valuecare delivery) have been rapidly moving health care toward a time where EHRs are as common as practice management or other financial systems in allprovider offices. As a result, we believe that legislation, such as the aforementioned MACRA, as well as other government-driven initiatives (including at thestate level), will continue to affect healthcare IT adoption and expansion, including products and solutions like ours. We also believe that we are well-positioned in the market to take advantage of the ongoing opportunity presented by these changes.Given that CMS has proposed further regulations which require EHRs and other health information technology, including the QPP and paymentrules for upcoming years, even as we comply with previously published rules, as well as Stage 3 of the Meaningful Use program for those organizations noteligible for the QPP, our industry is preparing for additional areas in which we must execute compliance. Similarly, our ability to achieve applicable productcertifications, the changing strategies related to the Office of the National Coordinator for Health Information Technology (“ONC”) certification program,and the length, if any, of additional related development and other efforts required to meet regulatory standards, could materially impact our capacity tomaximize the market opportunity. All of our market-facing EHR solutions, as well as the Allscripts EDTM, dbMotion and FollowMyHealth® products, havesuccessfully completed the testing process and are certified as 2015 Edition-compliant by an ONC-Authorized Certification Body, in accordance with theapplicable provider or hospital certification criteria adopted by the United States Secretary of Health and Human Services. 33 Use of the Medicare Sustainable Growth Rate reimbursement model ceased in 2015 with the passage of the MACRA. The MACRA furtherencouraged the adoption of health IT necessary to satisfy new requirements more closely associating the report of quality measurements to Medicarepayments. Following the finalization of the rule for the QPP in 2017, providers accepting payment from Medicare were given an opportunity to select one oftwo payment models: the Merit-based Incentive Payment System (“MIPS”) or an Advanced Alternative Payment Model (“APM”). Both of these programsrequire substantive reporting on quality measures; additionally, the MIPS consolidated several preexisting incentive programs, including Meaningful Useand Physician Quality Reporting System, under one umbrella, as required by statute. The implementation of this new law is likely driving additional interestin our products among providers who were not eligible for or chose not to participate in the Health Information Technology for Economic and ClinicalHealth Act (“HITECH”) incentive program but now see a new reason to adopt EHRs and other health information technologies or by those needing topurchase more robust systems to help comply with more complex MACRA requirements. Additional regulations continue to be released annually clarifyingrequirements related to reporting and quality measures, which will enable physician populations and healthcare organizations to make strategic decisionsabout the purchase of analytic software or other solutions important to comply with the new law and associated regulations.HITECH resulted in additional related new orders for our EHR products, and we believe that the MACRA could drive purchases of not only EHRsbut additional technologies necessary in advanced payment models. Large physician groups will continue to purchase and enhance their use of EHRtechnology; while the number of very large practices with over 100 physicians that have not yet acquired such technology is insignificant, those consideringreplacement purchases are increasing. Such practices may choose to replace older EHR technology in the future as regulatory requirements (such as thoserelated to Advanced APMs) and business realities dictate the need for updates and upgrades, as well as additional features and functionality. As incentivepayment strategies shift in policies under the current Presidential Administration in the United States, the role of commercial payers and their continuedexpansion of alternative payment models and interest in attaining larger volumes of clinical data, as well as the anticipated growth in Medicaid paymentmodels, 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 a variety of incentive programs, while the subsidizing health systemexpands connectivity within the local provider community. We believe that the 2013 extension of exceptions to the Stark Law and Anti-Kickback Statute,which allowed hospitals and other organizations to subsidize the purchase of EHRs, will continue to contribute to the growth of this market dynamic, and weawait announced regulatory revisions from HHS that are expected to further support value-based payment models and their associated purchasingarrangements between hospitals and physician practices. We also believe that new orders driven by the MACRA legislation and related to EHR andcommunity-based activity may continue to come in as physicians in those small- and medium-sized practices seek to avoid payment adjustments stemmingfrom the QPP or programs implemented by commercial payers. The associated challenge we face is to successfully position, sell, implement and support ourproducts to hospitals, health systems or integrated delivery networks that subsidize their affiliated physicians. We believe the community programs we havein 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 paymentprograms. 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 thenear term, and if they do, that we will have the capacity to meet the additional market demand in a timely fashion. 34 Additionally, other public laws to reform the United States healthcare system contain various provisions which may impact us and our clients.Continued efforts by the current Presidential Administration and Congress to alter aspects of the Patient Protection and Affordable Care Act (as amended, the“PPACA”) create uncertainty for us and for our clients, particularly as it relates to funding of the cost sharing subsidies. Some laws currently in place mayhave a positive impact by requiring the expanded use of EHRs, quality measurement, prescription drug monitoring and analytics tools to participate incertain federal, state or private sector programs. Others, such as adjustments made to the PPACA by the current presidential Administration and Congress,laws or regulations mandating reductions in reimbursement for certain types of providers, decreasing insurance coverage of patients, state level requests forwaivers from CMS related to Medicaid modeling, or increasing regulatory oversight of our products or our business practices, may have a negative impact byreducing the resources available to purchase our products. Increases in fraud and abuse enforcement and payment adjustments for non-participation in certainprograms or overpayment of certain incentive payments may also adversely affect participants in the healthcare sector, including us. Generally,Congressional oversight of EHRs and health information technology increased in recent years, including a specific focus on perceived interoperabilityfailures and physician frustration with user burden, as well as any contributing factors to such dissatisfaction, which could impact our clients and ourbusiness. The passage of the 21st Century Cures Act in December 2016 assuaged some concerns about interoperability and possible FDA oversight of EHRs,but we will be paying close attention to the regulations on data blocking that are expected shortly from HHS. Congressional focus on addressing the opioidepidemic in part through technological applications and reducing clinician burden are likely to continue, as well. The Administration is also taking action insome areas that may or directly or indirectly affect Allscripts and our clients, including efforts to increase health-related price transparency in order to supportpatients in applying market-based pressures to the nation’s challenge of cost containment. Further, CMS has proposed changes to the Evaluation &Management coding structure that ties closely to our clients’ requirements to document the care they are delivering prior to payment. We expect thesechanges may have a positive effect on clinician satisfaction with our EHRs, if implemented as proposed, though the fundamentals of payment will remain intransition to value-based payment models.New payment and delivery system reform programs, including those related to the Medicare program, are increasingly being rolled out at the statelevel through Medicaid administrators, as well as through the private sector, presenting additional opportunities for us to provide software and services to ourclients who participate.We derive our revenues primarily from sales of our proprietary software (either as a perpetual license sale or under a subscription delivery model),support and maintenance services, and managed services, such as outsourcing, private cloud hosting and revenue cycle management.Summary of ResultsDuring 2018, 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: •U.S. Core Solutions and Services: We expanded the breadth of our solutions through both internal innovation and acquisitions. During 2018,completed the acquisitions of Practice Fusion, Inc. and Health Grid Holding Company. Practice Fusion offers affordable certified cloud-basedelectronic health record for traditionally hard-to-reach small, independent physician practices. Health Grid is a patient engagement solutionsprovider that helps independent providers, hospitals and health systems improve patient interactions and satisfaction. We also announced a newmobile and cloud-based EHR - Avenel™. •Value-based Care: During 2018, as the healthcare industry continues its transition toward value-based care model, we launched our newintegrated data systems and services payer and life sciences business and brand Veradigm™, which combines data-driven clinical insights withactionable tools for clinical workflow, research, analytics and media. •Capital Deployment and Operational Efficiency: During 2018, we completed the integration of the Enterprise Information Solutions Business(the “EIS Business”) systems and solutions into our operations and solutions offerings. This integration included the divestitures of the StrategicSourcing business and of the OneContent business. We also sold our investment in Netsmart. These divestitures generated cash proceeds of over$800 million, which we partly used for share repurchases and to pay-off balances outstanding under our senior secured credit facility.Total revenue for the year ended December 31, 2018 was $1.7 billion, an increase of 17% compared with the year ended December 31, 2017. For theyear ended December 31, 2018, software delivery, support and maintenance revenue totaled $1.1 billion, an increase of 18%, and client services revenuetotaled $622 million, an increase of 15%, respectively, as compared with the year ended December 31, 2017.Gross profit increased during 2018 compared to 2017, primarily due to improved profitability from our recurring subscription-based software salesand recurring managed services solutions as we continue to expand our customer base for these services, including through recent acquisitions. Gross margindeclined by 0.9% to 41.4% compared with prior year period gross margin of 42.3% primarily due to lower sales of higher margin perpetual software licensesand higher amortization of software development and acquisition-related assets driven by additional amortization expense associated with intangible assetsacquired as part of recent acquisitions. 35 Our contract backlog as of December 31, 2018 was $3.9 billion, a decrease of 7% compared with our contract backlog as of December 31, 2017.On December 31, 2018, we sold all of the Class A Common Units of Netsmart LLC (“Netsmart”) held by the Company for aggregate consideration of$566 million in cash, plus a final settlement as determined following the closing. Netsmart was originally acquired in April 2016 and we realized a gain onsale of $500.5 million. Prior to the sale, Netsmart comprised a separate reportable segment, which due to its significance to our historical consolidatedfinancial statements and results of operations, is now reported as a discontinued operation as a result of the sale for all periods presented.Revenues and ExpensesRevenues are derived primarily from sales of our proprietary software (either under a perpetual or term license delivery model), subscription-basedsoftware sales, post-contract client support and maintenance services, and managed services solutions, such as outsourcing, private cloud hosting andrevenue cycle management.Cost of revenue consists primarily of salaries, incentive compensation and benefits for our billable professionals, third-party software costs, third-partytransaction processing and consultant costs, amortization of acquired proprietary technology and capitalized software development costs, depreciation andother direct engagement costs.Selling, general and administrative expenses consist primarily of salaries, incentive compensation and benefits for management and administrativepersonnel, sales commissions and marketing expenses, facilities costs, depreciation and amortization and other general operating expenses.Research and development expenses consist primarily of salaries, incentive compensation and benefits for our development personnel, third‑partycontractor costs and other costs directly or indirectly related to development of new products and upgrading and enhancing existing products.Asset and goodwill impairment charges consist primarily of non-cash charges related to our decision to discontinue several software developmentprojects and the impairment of several intangible assets and goodwill related to our acquisition of the patient/provider engagement solutions business fromNantHealth in 2017.Amortization of intangible and acquisition-related assets consists of amortization of customer relationships, tradenames and other intangiblesacquired through business combinations recorded under the purchase method of accounting.Interest expense consists primarily of interest on the 1.25% Notes and on the outstanding debt under our senior secured credit facility, including theamortization of debt discounts and debt issuance costs.Gain on sale of businesses, net consists of net gains from the divestitures during 2018 of the OneContent and Strategic Sourcing businesses, both ofwhich were acquired as part of the EIS Business acquisition during the fourth quarter of 2017.Impairment of long-term investments primarily consists of other-than-temporary and realized losses associated with our available for sale marketablesecurities.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 Netsmart, including the gain from the sale of Netsmart, and of two solutionsacquired with the EIS Business, which were sunset in 2018. 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 our consolidated financial statements and the accompanying notes. The accounting policies and estimatesdiscussed in this section are those that we consider to be particularly critical to an understanding of our consolidated financial statements because theirapplication involves significant judgment regarding the effect of inherently uncertain matters on our financial results. Actual results could differ materiallyfrom these estimates under different assumptions or conditions.Revenue RecognitionWe adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2014-09, Revenue from Contracts with Customers: Topic606 (“ASU 2014-09”) effective on January 1, 2018 using the modified retrospective method. ASU 2014-09 superseded nearly all previously existing revenuerecognition guidance under GAAP. Refer to Note 2, “Revenue from Contracts with Customers” to our consolidated financial statements included in Part II,Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for detailed discussion about our revenue recognition accounting policies. 36 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, an impairment lossequal to the excess will be recorded not to exceed the carrying amount of goodwill assigned to the reporting unit. The recoverability of indefinite-livedintangible assets is assessed by comparison of the carrying value of an asset to its estimated fair value. If we determine that the carrying value of an assetexceeds its estimated fair value, an impairment loss equal to the excess will 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.During 2018, we made several organizational changes that affected our Clinical and Financial Solutions and Population Health reportable segments.Refer to Note 17, “Business Segments” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” ofthis Form 10-K for detailed discussion about these changes. During 2018, as a result of these organizational changes, we performed interim goodwillimpairment tests as of January 1, 2018 and July 1, 2018. While there was no impairment indicated as a result of both these interim tests, the estimated fairvalue of our Hospitals and Health Systems reporting unit exceeded the unit’s carrying value by 10%. The fair values of all other reporting units substantiallyexceeded their carrying values.We performed our annual goodwill impairment test as of October 1, 2018. As a result of this test, we concluded that the carrying value of theNantHealth reporting unit exceeded its fair value. Our latest available financial forecasts at the time of the annual goodwill impairment test reflected thatprojected future operating costs exceeded projected revenues resulting in negative operating margins for the NantHealth reporting unit. As a result, werecognized a goodwill impairment charge of $13.5 million, representing the entire goodwill balance assigned to the NantHealth reporting unit. In addition,the results of the annual goodwill impairment test indicated that the estimated fair value of our Hospitals and Health Systems reporting unit exceeded theunit’s carrying value by less than 10%. The fair values of all other reporting units substantially exceeded their carrying values. As of October 1, 2018, thegoodwill allocated to the Hospitals and Health Systems reporting unit was $516.8 million.In accordance with GAAP, definite-lived intangible assets are required to 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. 37 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 that the value of the capitalized softwarecould not be recovered, a write-down of the value of the capitalized software to its recoverable value is 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 three categories(Levels 1 to 3). The values of assets and liabilities assigned to Level 3 require the most judgement and are based unobservable inputs or prices for which littleor no market data exists. Therefore, Level 3 values can be susceptible to significant fluctuations, both positive and negative, from changes in the underlyingassumption used by management. Refer to Note 4, “Fair Value Measurements” to our consolidated financial statements included in Part II, Item 8, “FinancialStatements and Supplementary Data” of this Form 10-K for detailed information about financial assets and liabilities measured at fair value on a recurringbasis. 38 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. Overview of Consolidated Results 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue: Software delivery, support and maintenance $1,128,263 $958,187 $899,299 17.7% 6.5%Client services 621,699 539,521 486,770 15.2% 10.8%Total revenue 1,749,962 1,497,708 1,386,069 16.8% 8.1%Cost of revenue: Software delivery, support and maintenance 357,039 295,593 276,401 20.8% 6.9%Client services 565,504 484,591 437,154 16.7% 10.9%Amortization of software development and acquisition-related assets 102,876 84,725 71,215 21.4% 19.0%Total cost of revenue 1,025,419 864,909 784,770 18.6% 10.2%Gross profit 724,543 632,799 601,299 14.5% 5.2%Gross margin % 41.4% 42.3% 43.4% Selling, general and administrative expenses 450,967 400,688 334,521 12.5% 19.8%Research and development 268,409 202,282 178,534 32.7% 13.3%Asset impairment charges 58,166 0 4,650 NM 100.0%Goodwill impairment charge 13,466 0 0 NM NM Amortization of intangible and acquisition-related assets 26,587 17,345 15,884 53.3% 9.2%(Loss) income from operations (93,052) 12,484 67,710 NM (81.6%)Interest expense (50,914) (37,540) (29,478) 35.6% 27.3%Other income (loss), net 74 (512) 829 114.5% (161.8%)Gain on sale of businesses, net 172,258 0 0 NM NM Impairment of long-term investments (15,487) (165,290) 0 (90.6%) NM Equity in net income (loss) of unconsolidated investments 259 821 (7,501) (68.5%) 110.9%Income (loss) from continuing operations before income taxes 13,138 (190,037) 31,560 106.9% NM Income tax (provision) benefit (469) 5,514 (309) (108.5%) NM Effective tax rate 3.6% 2.9% 1.0% Income (loss) from continuing operations, net of tax 12,669 (184,523) 31,251 (106.9%) NM Loss from discontinued operations (72,836) (11,915) (46,344) NM 74.3% Gain on sale of Netsmart 500,471 0 0 NM NM Income tax effect on discontinued operations (32,497) 42,263 18,123 (176.9%) 133.2% Income (loss) from discontinued operations, net of tax 395,138 30,348 (28,221) NM NM Net (loss) income 407,807 (154,175) 3,030 NM NM Less: Net loss (income) attributable to non-controlling interest 4,527 1,566 (146) 189.1% NM Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations (48,594) (43,850) (28,536) 10.8% 53.7%Net loss attributable to AllscriptsHealthcare Solutions, Inc. stockholders $363,740 $(196,459) $(25,652) NM NMNM—We define “NM” as not meaningful for increases or decreases greater than 200%. 39 Revenue 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue: Software delivery, support and maintenance Recurring revenue $967,990 $802,080 $752,084 20.7% 6.6%Non-recurring revenue 160,273 156,107 147,215 2.7% 6.0%Total software delivery, support and maintenance 1,128,263 958,187 899,299 17.7% 6.5%Client services Recurring revenue 443,752 374,640 324,635 18.4% 15.4%Non-recurring revenue 177,947 164,881 162,135 7.9% 1.7%Total client services 621,699 539,521 486,770 15.2% 10.8%Total revenue $1,749,962 $1,497,708 $1,386,069 16.8% 8.1%Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017The increase in revenue for the year ended December 31, 2018 compared with the year ended December 31, 2017 was primarily driven by incrementalrevenue from the acquisitions of the EIS Business in the fourth quarter of 2017 and Practice Fusion in the first quarter of 2018. Total revenue includes theamortization of acquisition-related deferred revenue adjustments, which totaled $24 million and $29 million during the years ended December 31, 2018 and2017, respectively.Software delivery, support and maintenance revenue consists of recurring subscription-based software sales, support and maintenance revenue,recurring transactions revenue, as well as non-recurring perpetual software licenses sales, hardware resale and non-recurring transactions revenue. Clientservices revenue consists of recurring revenue from managed services solutions, such as outsourcing, private cloud hosting and revenue cycle management,as well as non-recurring project-based client services revenue. The growth in both recurring and non-recurring software delivery, support and maintenanceand client services revenue for the year ended December 31, 2018 compared with the prior year was also largely driven by incremental revenue from theabove-mentioned two acquisitions.The percentage of recurring and non-recurring revenue of our total revenue was 81% and 19%, respectively, during the year ended December 31,2018, compared with 79% and 21%, respectively, during the year ended December 31, 2017.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016The increase in revenue for the year ended December 31, 2017 compared with the year ended December 31, 2016 was primarily driven by incrementalrevenue from the acquisitions of the EIS Business and the patient/provider engagement solutions business from NantHealth, which contributed $112 millionof revenue in the fourth quarter of 2017. Revenue from perpetual software license sales of our acute solutions and transaction-based services was also highercompared with the prior year. These increases were partly offset by higher amortization of acquisition-related deferred revenue adjustments during the yearended December 31, 2017 as compared with the prior year, which totaled $29 million and $1 million, respectively.The growth in both recurring and non-recurring software delivery, support and maintenance and client services revenue for the year ended December31, 2017 compared with the prior year was also largely driven by incremental revenue from the EIS Business and NantHealth acquisitions. Higher revenuesassociated with the sale of Allscripts integrated clinical software applications and health management and coordinated care solutions, including associatedclient services to implement these solutions, and private cloud hosting client services also contributed to these increases.The percentage of recurring and non-recurring revenue of our total revenue was 79% and 21%, respectively, during the year ended December 31,2017, representing a slight shift compared with 78% and 22%, respectively, during the year ended December 31, 2016.Gross Profit 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Total cost of revenue $1,025,419 $864,909 $784,770 18.6% 10.2%Gross profit $724,543 $632,799 $601,299 14.5% 5.2%Gross margin % 41.4% 42.3% 43.4% 40 Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Gross profit increased during the year ended December 31, 2018 compared with the year ended December 31, 2016 primarily due to the above-mentioned recent acquisitions. From a revenue mix perspective, gross profit associated with our recurring revenue streams, which include the delivery ofrecurring subscription-based software sales, support and maintenance, and recurring client services improved as we continued to expand our customer basefor these services, particularly those related to outsourcing and revenue cycle management. Gross profit associated with our non-recurring software delivery,support and maintenance revenue stream decreased primarily due to fewer perpetual software license sales of our acute and population health managementsolutions. Gross profit associated with our non-recurring client services revenue stream, which includes non-recurring project-based client services, decreasedprimarily driven by higher internal personnel costs, including those related to incremental resources from recent acquisitions. Gross margin decreasedprimarily due to lower sales of higher margin perpetual software licenses and higher amortization of software development and acquisition-related assetsdriven by additional amortization expense associated with intangible assets acquired as part of recent acquisitions.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 year ended December 31, 2016 primarily due to the acquisition ofthe EIS 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 software delivery, support and maintenancerevenue stream, which includes perpetual software licenses sales, hardware resale and non-recurring transactions revenue, also increased primarily driven byhigher gross profit from sales of our population health management and 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.Gross margin decreased by approximately 1% primarily due to higher amortization of software development and acquisition-related assets. Selling, General and Administrative Expenses 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Selling, general and administrative expenses $450,967 $400,688 $334,521 12.5% 19.8%Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Selling, general and administrative expenses increased during the year ended December 31, 2018 compared with the prior year, primarily due tohigher incentive-based compensation and incremental expenses from the acquisitions of the EIS Business, Practice Fusion and Health Grid, includingassociated transaction-related, severance and legal expenses as a result of these acquisitions.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 year ended December 31, 2016,primarily due to higher transaction-related, severance and legal expenses mostly related to the acquisition of the EIS Business.Research and Development 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Research and development $268,409 $202,282 $178,534 32.7% 13.3% 41 Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Research and development expenses increased during the year ended December 31, 2018 compared with the prior year, primarily due to higheroverall personnel costs, including higher incentive-based compensation and severance, and additional expenses from the acquisition of the EIS Business,Practice Fusion and Health Grid, which were partly offset by an increase in the amount of capitalized software costs. The increase in capitalized softwaredevelopment costs was primarily driven by our continued investment in expanding the capabilities and functionality of our traditional ambulatory, acute andpost-acute platforms as well as incremental investments in the emerging areas of precision medicine and cloud-based solution delivery. In addition, weincurred costs to integrate the solutions acquired through the above noted acquisitions. The capitalization of software development costs is highly dependenton the nature of the work being performed and the development status of projects and, therefore, it is common for the amount of capitalized softwaredevelopment costs to fluctuate.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Research and development expenses increased by 13% during the year ended December 31, 2017 compared with the prior year, primarily due tohigher overall personnel costs and additional expenses from the acquisition of the EIS Business, and lower amount of capitalized software costs in 2017compared with 2016. The increase in research and development expenses during the year ended December 31, 2017 was partially mitigated by our continuedefforts to streamline our operations and improve operational efficiency, including headcount actions taken during the second half of 2017. The capitalizationof software development costs is highly dependent on the nature of the work being performed and the development status of projects and, therefore, it iscommon for the amount of capitalized software development costs to fluctuate.Asset Impairment Charges 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Asset impairment charges $58,166 $0 $4,650 NM (100.0%)Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017During the year ended December 31, 2018, we incurred non-cash asset impairment charges of $33.2 million related to the write-off of capitalizedsoftware as a result of our decision to discontinue several software development projects. We also recognized $22.9 million of non-cash asset impairmentcharges related to our acquisition of the patient/provider engagement solutions business from NantHealth in 2017, which included the write-downs of $2.2million of acquired technology and $20.7 million, representing the unamortized value assigned to the modification of our existing commercial agreementwith NantHealth, as we no longer expect to recover the value assigned to these assets. The remaining $2.1 million of non-cash asset impairment chargesrecorded during the year ended December 31, 2018 relate to the disposal of fixed assets as a result of relocating and consolidating business functions andlocations from recent acquisitions.Year 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.Goodwill Impairment Charge 2018 % 2017 % Year Ended December 31, Change Change(In thousands) 2018 2017 2016 from 2017 from 2016Goodwill impairment charge $13,466 $0 $0 NM NMYear Ended December 31, 2018 Compared with the Year Ended December 31, 2017During the year ended December 31, 2018, we impaired all of the goodwill previously recognized as part of the acquisition of NantHealth’spatient/provider engagement solutions business following the completion of our annual goodwill impairment. Refer to Note 6, “Goodwill and IntangibleAssets” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for furtherinformation regarding this impairment. 42 Amortization of Intangible and Acquisition-Related Assets 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Amortization of intangible and acquisition-related assets $26,587 $17,345 $15,884 53.3% 9.2%Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017The increase in amortization expense for the year ended December 31, 2018 compared with the prior year was primarily due to incrementalamortization expense associated with intangible assets acquired as part of business acquisitions completed during the fourth quarter of 2017 and the first halfof 2018, the largest being the acquisitions of the EIS Business and Practice Fusion. Refer to Note 3, “Business Combinations” to our consolidated financialstatements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for additional information regarding businessacquisitions.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 year ended December 31, 2016 was primarily due to afull year of amortization expense associated with the value of intangible assets recognized in connection with the acquisitions of controlling interests inseveral third parties during the fourth quarter of 2016 as well as amortization expense associated with intangible assets acquired as part of the EIS Businessacquisition in the fourth quarter of 2017. Interest Expense 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Interest expense $50,914 $37,540 $29,478 35.6% 27.3%Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Interest expense during the year ended December 31, 2018 increased compared with the prior year primarily due to the combination of higher averageoutstanding borrowings under Allscripts’ senior secured credit facility and higher interest rates. The higher average outstanding borrowings were largely dueto additional borrowings to finance the acquisition of the EIS Business during the fourth quarter of 2017 and the acquisitions of Practice Fusion and HealthGrid during 2018.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 year ended December 31, 2016 primarily due to higheroutstanding borrowings under Allscripts’ senior secured credit facility, partly due to additional borrowings of $170 million to finance the acquisition of theEIS Business during the fourth quarter of 2017. In addition, the interest rates on Allscripts’ senior secured credit facility were higher during 2017 as comparedwith 2016.Gain on Sale of Businesses, Net 2018 % 2017 % Year Ended December 31, Change Change(In thousands) 2018 2017 2016 from 2017 from 2016Gain on sale of businesses, net $172,258 $0 $0 NM NMYear Ended December 31, 2018 Compared with the Year Ended December 31, 2017Gain on sale of businesses, net for the year ended December 31, 2018 consists of a gain of $177.9 million and a loss of $5.6 million from thedivestitures of the OneContent and Strategic Sourcing businesses, respectively, both of which were acquired as part of the EIS Business acquisition duringthe fourth quarter of 2017.Impairment of Long-term investments 2018 % 2017 % Year Ended December 31, Change Change(In thousands) 2018 2017 2016 from 2017 from 2016Impairment of long-term investments $15,487 $165,290 $0 (90.6%) NM 43 Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017During the year ended December 31, 2018, we recognized non-cash charges related to two of our cost-method equity investments and a related notereceivable. These charges equaled the cost bases of the investments and the related note receivable prior to the impairment.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016During the year ended December 31, 2017, we recorded non-cash impairment charges of $165.3 million associated with two of the Company’s long-term investments. The majority of the impairment charges relate to our previous investment in NantHealth common stock which we fully disposed of inconnection with our acquisition of certain assets related to NantHealth’s patient/provider engagement solutions business during the third quarter 2017.Equity in Net Income (Loss) of Unconsolidated Investments 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Equity in net income (loss) of unconsolidated investments $259 $821 $(7,501) (68.5%) 110.9%Year Ended December 31, 2018 Compared with the Years Ended December 31, 2017 and 2016Equity 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 of accounting based on one quarter lag. The majority of the amount recognized during the year ended December 31,2016 represents our share of the net losses incurred by NantHealth prior to NantHealth’s initial public offering (“IPO”) in June 2016, including theamortization of cost basis adjustments. Our investment in NantHealth common stock was accounted for as an available-for-sale marketable security after theIPO until the full disposition of the NantHealth common stock in the third quarter of 2017 in connection with our acquisition of certain assets related toNantHealth’s patient/provider engagement solutions business.Income Tax (Provision) Benefit 2018 % 2017 % Year Ended December 31, Change Change(In thousands) 2018 2017 2016 from 2017 from 2016Income tax (provision) benefit $(469) $5,514 $(309) (108.5%) NMEffective tax rate 3.6% 2.9% 1.0% Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017The United States Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 and introduced significant changes to the income taxlaw in 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 ("GILTI") tax and Base Erosion andAnti-Abuse Tax (“BEAT”) rules, respectively. In addition, in 2017 we were subject to a one-time transition tax on accumulated foreign subsidiary earningsnot previously subject to income tax 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 expense of $15.3 million in our financial statements for the year ended December 31, 2017 in accordance with guidance inStaff Accounting Bulletin No. 118 (“SAB 118”), which allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize therecording of the related tax impacts. This provisional benefit included $10.1 million expense for remeasurement of deferred tax balances to reflect the lowerfederal rate and expense of $5.2 million for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to income tax inthe United States. Adjustments to these provisional amounts that we recorded in 2018 did not have a significant impact on our consolidated financialstatements. Our accounting for the effects of the enactment of United States Tax Reform is now complete. Due to our divestiture of our investment inNetsmart, the amounts noted above do not include the provisional amounts recorded by Netsmart in 2017.Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to valuation allowance,permanent differences, income attributable to foreign jurisdictions taxed at rates different from the United States federal statutory income tax rate, state taxes,tax credits and certain discrete items. Our effective tax rate for the year ended December 31, 2018, compared with the prior year, primarily due to the effects ofthe stricter executive compensation deduction provisions of the Tax Act recorded in 2018, offset by the United States federal rate reduction of 21% versus35% in 2017. 44 In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available evidence,including scheduled reversals of deferred tax liabilities, tax-planning strategies, and results of recent operations. In evaluating the objective evidence thathistorical results provide, we consider three years of cumulative operating income (loss). In the year ended December 31, 2018, we released $64.8 million ofvaluation allowance, mostly due to the utilization of capital loss carryforward against capital gain incurred during the year ended December 31, 2018 and heutilization of federal credit carryforwards.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016The Tax Act enacted on December 22, 2017, introduced significant changes to the income tax law in the United States that became effective in 2018.Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects andrecorded provisional amounts in our financial statements as of December 31, 2017. SAB 118 provided guidance for companies that had not completed theiraccounting 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 the enactment dateof the Tax Act to finalize the recording of the related tax impacts. As of December 31, 2017, we had not completed our accounting for these tax effects,however, we made a reasonable estimate of the effects on our deferred tax balances and in relation to the transition tax. The remeasurement of our deferred taxbalances to reflect the reduced federal rate resulted in net tax benefit of $26.0 million. In addition, we estimated and recorded tax expense of $5.2 million inour tax provision for the year ended December 31, 2017.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 net operating loss(“NOL”) carryforwards. During the year ended December 31, 2016, we released valuation allowance of $17.5 million related to federal credit carryforwards,and foreign and state NOL carryforwards to offset 2017 taxable income. Using all available evidence, as of December 31, 2017, we determined that it wasuncertain that we will realize the deferred tax asset for certain of these carryforwards 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 2017, while release of valuation allowance of $17.5 million was recorded in the prior year.Discontinued Operations 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Loss from discontinued operations $(72,836) $(11,915) $(46,344) NM (74.3%)Gain on sale of Netsmart 500,471 $0 $0 NM NM Income tax effect on discontinued operations (32,497) 42,263 18,123 (176.9%) 133.2%Income (loss) from discontinued operations, net of tax $395,138 $30,348 $(28,221) NM NMYear Ended December 31, 2018 Compared with the Years Ended December 31, 2017 and 2016On December 31, 2018, we sold all of the Class A Common Units of Netsmart owned by the Company. Prior to the sale, Netsmart comprised a separatereportable segment, which due to its significance to our historical consolidated financial statements and results of operations, is now reported as adiscontinued operation as a result of the sale for all periods presented. The loss from discontinued operations represents the net of losses incurred by Netsmartfor the years ended December 31, 2018, 2017 and 2016 partly offset by earnings attributable to two solutions acquired during the fourth quarter of 2017 aspart of the EIS Business that we no longer support effective as of March 31, 2018. Refer to Note 16, “Discontinued Operations” to our consolidated financialstatements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for additional information regarding discontinuedoperations.Non-Controlling Interests 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Net loss (income) attributable to non-controlling interest $4,527 $1,566 $(146) 189.1% NM Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations $(48,594) $(43,850) $(28,536) 10.8% 53.7% 45 Year Ended December 31, 2018 Compared with the Years Ended December 31, 2017 and 2016The 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 preference on redeemable convertible non-controlling interest represents the accretion of liquidation preference at 11% per annum to the value of the preferred units of Netsmart for each of the periodspresented prior to the sale of our investment in Netsmart on December 31, 2018.Segment OperationsOverview of Segment Results 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue: Clinical and Financial Solutions $1,565,987 $1,337,030 $1,183,196 17.1% 13.0%Population Health 190,706 173,809 177,394 9.7% (2.0%)Unallocated Amounts (6,731) (13,131) 25,479 (48.7%) (151.5%)Total revenue $1,749,962 $1,497,708 $1,386,069 16.8% 8.1% Gross Profit: Clinical and Financial Solutions $663,005 $574,386 $496,595 15.4% 15.7%Population Health 146,614 142,514 149,338 2.9% (4.6%)Unallocated Amounts (85,076) (84,101) (44,634) 1.2% 88.4%Total gross profit $724,543 $632,799 $601,299 14.5% 5.2% Income from operations: Clinical and Financial Solutions $344,568 $335,005 $287,077 2.9% 16.7%Population Health 100,118 112,577 123,685 (11.1%) (9.0%)Unallocated Amounts (537,738) (435,098) (343,052) 23.6% 26.8%Total (loss) income from operations $(93,052) $12,484 $67,710 NM (81.6%)The results for the years ended December 31, 2017 and 2016 have been recast to conform to the current year presentation, which reflects severalchanges made to our organizational and reporting structure during the year ended December 31, 2018. Refer to Note 17, “Business Segments” to ourconsolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for detailed discussion aboutthese changes to our segments.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, connectivity and coordinated care solutions, financial and practice managementsoftware, related installation, support and maintenance, outsourcing, private cloud hosting, revenue cycle management, training and electronic claimsadministration services. 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue $1,565,987 $1,337,030 $1,183,196 17.1% 13.0%Gross profit $663,005 $574,386 $496,595 15.4% 15.7%Gross margin % 42.3% 43.0% 42.0% Income from operations $344,568 $335,005 $287,077 2.9% 16.7%Operating margin % 22.0% 25.1% 24.3% Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Clinical and Financial Solutions revenue, gross profit and income from operations increased during the year ended December 31, 2018 compared withthe year ended December 31, 2017, as higher revenue from recurring software delivery, support and maintenance, and recurring and non-recurring clientservices was partly offset by lower non-recurring software delivery, support and maintenance revenue. The increase in overall segment revenue was primarilyas a result of the acquisitions of the EIS Business during the fourth quarter of 2017 and Practice Fusion during the first quarter of 2018. The decrease in non-recurring software delivery, support and maintenance revenue was primarily driven by fewer perpetual software license sales of our acute and coordinatedcare solutions as the prior year included several large transactions which did not recur in the current year. 46 Gross margin decreased during the year ended December 31, 2018 compared with the prior year primarily due to lower sales of higher marginperpetual software licenses, higher internal personnel costs related to incremental resources from recent acquisitions and to support anticipated new hostingclient go-lives, and higher amortization of capitalized software development and acquired technology-related intangible assets.Operating margin declined during the year ended December 31, 2018 compared with the prior year due to increases in selling, general andadministrative, and research and development expenses, mostly driven by recent acquisitions, partly offset by higher capitalization of internal softwaredevelopment expenses.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, driven by higher revenueacross all of our primary revenue streams which include both recurring and non-recurring software delivery, support and maintenance and client servicesrevenue. This increase was primarily driven by incremental revenue from the acquisitions of the EIS Business and patient/provider engagement solutionsbusiness from NantHealth, which contributed $112 million of revenue. 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 increased compared with the year ended December 31, 2016, as higher software license sales of our acute solutions and relatedprofessional services revenue, driven by a higher number of larger acute client expansions, was partly offset by lower non-recurring revenue associated withour ambulatory solutions attributable to fewer large implementations of our ambulatory solutions as certain large service projects were mostly completed in2016.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.Population HealthOur Population Health segment derives its revenue from the sale of health management, financial management and patient engagement solutions,which are mainly targeted at hospitals, health systems, other care facilities and ACOs. These solutions enable clients to transition and analyze care across theentire care community. 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue $190,706 $173,809 $177,394 9.7% (2.0%)Gross profit $146,614 $142,514 $149,338 2.9% (4.6%)Gross margin % 76.9% 82.0% 84.2% Income from operations $100,118 $112,577 $123,685 (11.1%) (9.0%)Operating margin % 52.5% 64.8% 69.7% Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Population Health revenue increased during the year ended December 31, 2018 compared with the year ended December 31, 2017, primarily due toincreased sales of our financial management and subscription-based patient engagement solutions, including associated client services to implement andsupport these solutions. Gross profit increased slightly as the growth in revenue was mostly offset by higher internal personnel costs, including incrementalresources from the Health Grid acquisition. Gross margin decreased during the year ended December 31, 2018 compared with the prior year, primarily due tothe increase in internal personnel costs. Income from operations and the operating margin decreased during the year ended December 31, 2018 compared with the prior year, primarily due tohigher selling, general and administrative expenses and research and development investments incurred to support business growth in this segment. 47 Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Population Health revenue and gross profit declined during the year ended December 31, 2017 compared with the year ended December 31, 2016primarily due to lower software delivery, support and maintenance revenue associated with the sale of our transition of care solutions and higher amortizationof capitalized software development and acquired technology-related intangible assets. Income from operations also declined as a result of an increase inselling, general and administrative expenses, which was partly offset by higher capitalization of internal software development expenses. Gross margin andoperating margin decreased due the same factors that impacted the overall profitability of the segment.Unallocated AmountsIn determining revenue, gross profit and income from operations for our segments, we do not include in revenue the amortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in a business acquisition. We also exclude theamortization of intangible assets, stock-based compensation expense, non-recurring expenses and transaction-related costs, and non-cash asset impairmentcharges from the operating segment data provided to our CODM. Non-recurring expenses relate to certain severance, product consolidation, legal, consultingand other charges incurred in connection with activities that are considered one-time. Accordingly, these amounts are not included in our reportable segmentresults and are included in the “Unallocated Amounts” category. The “Unallocated Amounts” category also includes (i) corporate general and administrativeexpenses (including marketing expenses) and certain research and development expenses related to common solutions and resources that benefit all of ourbusiness units, all of which are centrally managed, (ii) revenue and the associated cost from the resale of certain ancillary products, primarily hardware and(iii) the results of the 2bPrecise operating segment. 2018 % 2017 % Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Revenue $(6,731) $(13,131) $25,479 (48.7%) (151.5%)Gross profit $(85,076) $(84,101) $(44,634) 1.2% 88.4%Gross margin % NM NM (175.2%) Loss from operations $(537,738) $(435,098) $(343,052) 23.6% 26.8%Operating margin % NM NM NM Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Revenue 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, 2018 compared with the prior year improved primarily due to lower recognition of amortizationof acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenues acquired in the EIS Business, PracticeFusion, Health Grid and NantHealth provider/patient engagement acquisitions. Such adjustments totaled $24 million for the year ended December 31, 2018compared with $29 million for the year ended December 31, 2017.Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $531 million for the yearended December 31, 2018 compared with $422 million for the prior year. The increase in the year ended December 31, 2018 compared with prior year wasprimarily driven by higher transaction-related, severance and legal expenses, primarily related to the acquisitions of the EIS Business, Practice Fusion andHealth Grid, which included higher (i) asset impairment charges of $58 million, (ii) goodwill impairment charges of $14 million, (iii) higher transaction-related, severance and legal expenses of $30 million, and (iii) higher amortization of intangible and acquisition-related asset of $9 million. The increase inamortization expense was primarily due to additional amortization expense associated with intangible assets acquired as part of business acquisitionscompleted since the third quarter of 2017.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 $29 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 year ended December 31, 2016 includes approximately $8 million of revenuerelated to our HomecareTM business prior to its sale to Netsmart in April 2016, while the year ended December 31, 2017 does not include any activity relatedto the HomecareTM business. Hardware revenue for the year ended December 31, 2017 was slightly lower compared with the prior year.Gross unallocated expenses, which represent the unallocated loss from operations excluding the impact of revenue, totaled $422 million for the yearended December 31, 2017 compared to $369 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 $4 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. 48 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) 2018 2017 % Change Software delivery, support and maintenance $2,507 $2,533 (1.0%)Client services 1,350 1,624 (16.9%)Total contract backlog $3,857 $4,157 (7.2%)Total contract backlog as of December 31, 2018 decreased compared with December 31, 2017. Backlog excludes amounts attributable to Netsmart.Total contract backlog can fluctuate between periods based on the level of revenue and bookings as well as the timing and mix of renewal activity andperiodic revalidations.We estimate that the aggregate contract backlog as of December 31, 2018 will be recognized as revenue in future years as follows: Year Ended December 31, (Percentage ofTotal Backlog) 2019 39%2020 22%2021 15%2022 9%2023 5%Thereafter 10%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 of December31, 2018, our principal sources of liquidity consisted of cash and cash equivalents of $185 million and available borrowing capacity of $899 million underour revolving credit facility. The change in our cash and cash equivalents balance is reflective of the following:Operating Cash Flow Activities 2018 $ 2017 $ Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Net income (loss) $407,807 $(154,175) $3,030 $561,982 $(157,205)Less: Income (loss) from discontinued operations 395,138 30,348 (28,221) 364,790 58,569 (Loss) Income from continuing operations 12,669 (184,523) 31,251 197,192 (215,774)Non-cash adjustments to net income (loss) 136,651 351,835 184,578 (215,184) 167,257 Cash impact of changes in operating assets and liabilities (60,086) 57,746 18,519 (117,832) 39,227 Net cash provided by operating activities - continuing operations 89,234 225,058 234,348 (135,824) (9,290)Net cash provided by operating activities - discontinued operations (21,343) 54,357 34,656 (75,700) 19,701 Net cash provided by operating activities $67,891 $279,415 $269,004 $(211,524) $10,411Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017Net cash provided by operating activities – continuing operations decreased during the year ended December 31, 2018 compared with the prior yearprimarily due to working capital changes and higher costs during the year ended December 31, 2018 compared with the prior year, which primarily includedhigher interest expense, transaction-related and legal expenses, and incentive-based compensation payments. The decrease in non-cash adjustments to netloss was primarily driven by lower other-than-temporary non-cash impairment charges associated with long-term investments, intangibles and goodwillduring the year ended December 31, 2018 compared with the prior year. 49 Net cash provided by operating activities – discontinued operations decreased during the year ended December 31, 2018 compared with the prior yearprimarily driven by the additional tax provision relating to the gain from the sale of our investment in Netsmart on December 31, 2018. Netsmart generatedcash from operations during both 2018 and 2017. During 2018, Netsmart’s cash provided by operations decreased by approximately $16 million primarilydriven by higher interest expenses paid attributable to Netsmart’s credit facilities.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash provided by operating activities – continuing operations decreased during the year ended December 31, 2017 compared with the year endedDecember 31, 2016 primarily due to higher transaction-related and legal expenses, including legal settlements during 2017, and higher interest expenses.These increases were partly offset by improved working capital. The increase in non-cash adjustments to net loss was primarily driven by other-than-temporary impairment charges associated with long-term investments.Net cash provided by operating activities – discontinued operations increased during the year ended December 31, 2017 compared with the yearended December 31, 2016 primarily due to a full year of results being included in 2017 as compared with a partial year in 2016. In addition, during the yearended December 31, 2017, Netsmart had higher earnings compared with the prior year. These increases were partly offset by higher interest expenses paidattributable to Netsmart’s debt.Investing Cash Flow Activities 2018 $ 2017 $ Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Capital expenditures $(31,309) $(38,759) $(32,107) $7,450 $(6,652)Capitalized software (113,308) (118,241) (92,179) 4,933 (26,062)Cash paid for business acquisitions, net of cash acquired (177,233) (169,823) (99,837) (7,410) (69,986)Cash received from sale of businesses, net 807,764 0 0 807,764 0 Purchases of equity securities, other investments and related intangible assets (16,934) (5,606) (21,185) (11,328) 15,579 Other proceeds from investing activities 54 215 37 (161) 178 Net cash provided by (used in) investing activities - continuing operations 469,034 (332,214) (245,271) 801,248 (86,943)Net cash used in investing activities - discontinued operations (221,021) (80,758) (908,735) (140,263) 827,977 Net cash provided by (used in) investing activities $248,013 $(412,972) $(1,154,006) $660,985 $741,034Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017We had cash inflows from investing activities – continuing operations during the year ended December 31, 2018 compared with cash outflows frominvesting activities – continuing operations during the year ended December 31, 2017, which was primarily driven by cash proceeds of $567 million from thesale of our investment in Netsmart and $241 million of net cash proceeds from the divestiture of the OneContent business during 2018. In addition, during2018 we made additional investments in business acquisitions, which were mostly offset by lower overall capital expenditures.Net cash used in investing activities – discontinued operations increased during the year ended December 31, 2018 compared with the prior year,primarily due to larger business acquisitions completed by Netsmart during 2018.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash used in investing activities – continuing operations increased during the year ended December 31, 2017 compared with the year endedDecember 31, 2016. This increase was primarily driven by cash used for the acquisitions of the EIS Business from McKesson Corporation in 2017 and higheroverall capital expenditures.Net cash used in investing activities – discontinued operations decreased during the year ended December 31, 2017 compared with the year endedDecember 31, 2016. During 2016, we completed the acquisition of Netsmart for $937 million, which in turn also invested in business acquisitions. Incomparison, cash used for business acquisition transactions by Netsmart during 2017 was significantly lower. 50 Financing Cash Flow Activities 2018 $ 2017 $ Year Ended December 31, Change Change (In thousands) 2018 2017 2016 from 2017 from 2016 Proceeds from sale or issuance of common stock $1,283 $1,568 $84 $(285) $1,484 Excess tax benefits from stock-based compensation 0 0 1,014 0 (1,014)Taxes paid related to net share settlement of equity awards (9,466) (7,269) (8,204) (2,197) 935 Payments of capital lease obligations (553) (1,283) (370) 730 (913)Credit facility payments (713,751) (138,139) (155,170) (575,612) 17,031 Credit facility borrowings, net of issuance costs 430,843 325,001 250,000 105,842 75,001 Repurchase of common stock (138,928) (12,077) (121,241) (126,851) 109,164 Payment of acquisition financing obligations (4,645) 0 0 (4,645) 0 Purchases of subsidiary shares owned by non-controlling interest (7,198) 0 0 (7,198) 0 Net cash (used in) provided by financing activities - continuing operations (442,415) 167,801 (33,887) (610,216) 201,688 Net cash provided by financing activities - discontinued operations 149,432 30,784 899,158 118,648 (868,374)Net cash (used in) provided by financing activities $(292,983) $198,585 $865,271 $(491,568) $(666,686)Year Ended December 31, 2018 Compared with the Year Ended December 31, 2017We used cash in financing activities – continuing operations during the year ended December 31, 2018 compared with cash inflows from financingactivities – continuing operations during the year ended December 31, 2017, which was primarily driven by higher repayments of borrowings outstandingunder our senior secured credit facility and higher common stock repurchases. At the end of 2018, we used a portion of the proceeds from the sale of ourinvestment in Netsmart to repay balances outstanding under our senior secured credit facilities. Earlier in 2018, we borrowed funds to complete theacquisitions of Health Grid and Practice Fusion, and acquire the outstanding minority interest in a third party in which we initially acquired a controllinginterest in April 2015.Net cash provided by financing activities – discontinued operations increased during the year ended December 31, 2018 compared with the prior yearprimarily due to higher borrowings by Netsmart used to finance business acquisitions.Year Ended December 31, 2017 Compared with the Year Ended December 31, 2016Net cash provided by financing activities – continuing operations increased during the year ended December 31, 2017 compared with the year endedDecember 31, 2016, primarily due to smaller amount of common stock repurchases and higher senior secured credit facility net borrowings. During 2017, weborrowed $170 million under our revolving credit facility to finance the acquisition of the EIS Business.Net cash provided by financing activities – discontinued operations decreased during the year ended December 31, 2017 compared with the yearended December 31, 2016, primarily due lower credit facility net borrowings. During 2017, Netsmart borrowed $51 million under its senior secured term loanto finance business acquisitions. In comparison, during 2016, borrowings totaled $824 million and were primarily used to complete the Netsmart acquisition.Future Capital RequirementsThe following table summarizes future payments under our 1.25% Notes and Senior Secured Credit Facility as of December 31, 2018:(In thousands) Total 2019 2020 2021 2022 2023 Principal payments: 1.25% Cash Convertible Senior Notes (1) $345,000 $0 $345,000 $0 $0 $0 Senior Secured Credit Facility (2) 350,000 20,000 27,500 30,000 37,500 235,000 Total principal payments 695,000 20,000 372,500 30,000 37,500 235,000 Interest payments: 1.25% Cash Convertible Senior Notes (1) 8,626 4,313 4,313 0 0 0 Senior Secured Credit Facility (2) (3) 45,474 11,786 11,235 10,494 9,690 2,269 Total interest payments 54,100 16,099 15,548 10,494 9,690 2,269 Total future debt payments $749,100 $36,099 $388,048 $40,494 $47,190 $237,269 (1)Assumes no cash conversions of the 1.25% Notes prior to their maturity on July 1, 2020. 51 (2)Assumes no additional borrowings after December 31, 2018 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, 2018, which was 4.52%.Revolving Credit FacilitiesWe have a $900 million senior secured revolving facility (the “Revolving Facility”) that expires on February 15, 2023. A total of up to $50 millionof the 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 upto $100 million of the Revolving Facility could be borrowed under certain foreign currencies. We had no borrowings and $0.8 million of letters of creditoutstanding under the Revolving Facility as of December 31, 2018. We had $899 million available, net of outstanding letters of credit, under the RevolvingFacility as of December 31, 2018. There can be no assurance that we will be able to draw on the full available balance of the Revolving Facility if thefinancial institutions that have extended such credit commitments become unwilling or unable to fund such borrowings. Refer to Note 8, “Debt” to ourconsolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K for further information.Other Matters Affecting Future Capital RequirementsDuring 2017, we completed renegotiations with Atos and our other largest hosting partners to improve the operating cost structure of our privatecloud hosting operations. As a result of these renegotiations, we signed a new amended and restated agreement with Atos and, therefore, starting in 2018, webegan 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. The new amended and restated agreement extends the term to 2023 with annual auto-renewal periods for an additional twoyears thereafter. The new agreement also provides for the payment of initial annual base fees of $30 million per year (decreasing to $25 million by the end ofthe agreement) plus charges for volume-based services currently projected using volumes estimated based on historical actuals and forecasted projections.During the year ended December 31, 2018, we incurred $56 million of expenses under our agreement with Atos, which are included in cost of revenue in ourconsolidated statements of operations.Our total investment in research and development efforts during 2018 increased compared with 2017. The increase in capitalized softwaredevelopment costs was primarily driven by our continued investment in expanding the capabilities and functionality of our traditional ambulatory, acute andpost-acute platforms as well as incremental investments in the emerging areas of precision medicine and cloud-based solution delivery. In addition, weincurred costs to integrate the solutions acquired through recent acquisitions. Our total spending consists of research and development costs directly recordedto expense which are offset by the capitalization of eligible development costs.To supplement our statement of operations, the table below presents a non-GAAP measure of research and development-related expenses that webelieve is a useful metric for evaluating how we are investing in research and development. Year Ended December 31, (In thousands) 2018 2017 2016 Research and development costs directly recorded to expense $268,409 $202,282 $178,534 Capitalized software development costs per consolidated statement of cash flows (1) 113,308 118,241 92,179 Total non-GAAP R&D-related spending $381,717 $320,523 $270,713 Total revenue $1,749,962 $1,497,708 $1,386,069 Total non-GAAP R&D-related spending as a % of total revenue 22% 21% 20% (1)Amount for the years ended December 31, 2018 and 2017 include $0 million and $24 million, respectively, of third-party software purchases tosupplement our internal software development efforts.We believe that our cash and cash equivalents of $185 million as of December 31, 2018, our future cash flows, and our borrowing capacity under ourRevolving Facility, taken together, provide adequate resources to fund our ongoing cash requirements for the next twelve months. We cannot provideassurance that our actual cash requirements will not be greater than we expect as of the date of this Form 10-K. We will, from time to time, consider theacquisition of, or investment in, complementary businesses, products, services and technologies, and the repurchase of our common stock under our stockrepurchase program, each of which might impact our liquidity requirements or cause us to borrow under our credit facilities or issue additional equity or debtsecurities.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. 52 Contractual Obligations and CommitmentsWe enter into obligations with third parties in the ordinary course of business. The following table summarizes our significant contractual obligationsas of December 31, 2018 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 2019 2020 2021 2022 2023 Thereafter Balance sheet obligations: (1) Debt: Principal payments $695,000 $20,000 $372,500 $30,000 $37,500 $235,000 $0 Interest payments 54,100 16,099 15,548 10,494 9,690 2,269 0 Capital leases 1,833 1,351 422 46 14 0 0 Other obligations: (2) Non-cancelable operating leases 132,281 26,330 22,394 18,824 17,493 15,582 31,658 Purchase obligations (3) 120,369 57,525 35,097 16,734 11,013 0 0 Agreement with Atos 535,228 96,010 91,355 84,989 80,318 74,567 107,989 Letters of Credit 821 821 0 0 0 0 0 Total contractual obligations $1,539,632 $218,136 $537,316 $161,087 $156,028 $327,418 $139,647 (1)Our liability for uncertain tax positions was $20 million as of December 31, 2018. 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 $53 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, 2018. Additionally, we have obligations topay contingent consideration associated with acquisitions of $25.8 million as of December 31, 2018 2018. Such contingent consideration obligationsare excluded from the above table since their payment is based on future financial objectives, the achievement of which we cannot predict.(3)Purchase obligations consist of minimum purchase commitments for telecommunication services, computer equipment, maintenance, consulting andother commitments. 53 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 the principal balance of $350 million of debt outstanding under the Senior Secured Credit Facility as ofDecember 31, 2018, an increase in interest rates of 1.0% will cause a corresponding increase in annual interest expense of approximately $3.5 million.We have global operations; therefore, we are exposed to risks related to foreign currency fluctuations. Foreign currency fluctuations throughDecember 31, 2018 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 and shared services center in India and our local operations in Israel, where we are required to make payments in local currency butwhich we fund in United States dollars. We have entered into non-deliverable forward foreign currency exchange contracts with reputable bankingcounterparties in order to hedge a portion of our forecasted future Indian Rupee-denominated (“INR”) expenses against foreign currency fluctuations betweenthe United States dollar and the INR. As of December 31, 2018, there were 12 forward contracts outstanding that were staggered to mature monthly starting inJanuary 2019 and ending in December 2019. In the future, we may enter into additional forward contracts to increase the amount of hedged monthly INRexpenses or initiate hedges for monthly periods beyond December 2019. As of December 31, 2018, the total notional amount of each outstanding forwardcontract was 160 million INR, or the equivalent of $2.3 million, based on the exchange rate between the United States dollar and the INR in effect as ofDecember 31, 2018. These amounts also approximate the forecasted future INR expenses we target to hedge in any one month in the future. The forwardcontracts resulted in net gains of $0.5 million and $2.7 million during the years ended December 31, 2018 and 2017, 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. 54 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, 2018 and 2017, the related consolidated statements of operations and comprehensive (loss) income, changes inshareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and financial statementschedules included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in allmaterial respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of thethree years in the period ended December 31, 2018, in conformity with accounting 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, 2018, 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 22, 2019 expressedan unqualified opinion.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition in2018 due to the adoption of FASB Accounting Standards Codification (Topic 606), Revenue from Contracts with Customers.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 22, 2019 55 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, 2018, 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, 2018, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.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, 2018, and our report dated February 22, 2019 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.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 22, 2019 56 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) December 31, 2018 December 31, 2017 ASSETS Current assets: Cash and cash equivalents $174,243 $119,470 Restricted cash 10,552 11,524 Accounts receivable, net of allowance of $50,406 and $31,386 as of December 31, 2018 and December 31, 2017, respectively 465,264 492,560 Contract assets 66,451 0 Prepaid expenses and other current assets 142,455 106,455 Current assets attributable to discontinued operations 0 127,101 Total current assets 858,965 857,110 Fixed assets, net 121,913 135,417 Software development costs, net 209,660 194,845 Intangible assets, net 431,081 435,573 Goodwill 1,373,744 1,292,747 Deferred taxes, net 5,036 4,574 Contract assets - long-term 71,879 0 Other assets 109,206 146,851 Long-term assets attributable to discontinued operations 0 1,163,033 Total assets $3,181,484 $4,230,150 57 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED BALANCE SHEETS (CONTINUED) (In thousands, except per share amounts) December 31, 2018 December 31, 2017 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $73,166 $85,749 Accrued expenses 106,072 77,800 Accrued compensation and benefits 100,076 83,072 Income tax payable 29,644 0 Deferred revenue 466,797 478,574 Current maturities of long-term debt 20,059 27,687 Current maturities of capital lease obligations 996 1,102 Current liabilities attributable to discontinued operations 920 135,641 Total current liabilities 797,730 889,625 Long-term debt 647,539 906,725 Long-term capital lease obligations 768 2,347 Deferred revenue 15,984 19,208 Deferred taxes, net 58,470 23,258 Other liabilities 80,566 89,864 Long-term liabilities attributable to discontinued operations 0 707,516 Total liabilities 1,601,057 2,638,543 Redeemable convertible non-controlling interest attributable to discontinued operations 0 431,535 Commitments and contingencies Stockholders’ equity: Preferred stock: $0.01 par value, 1,000 shares authorized, no shares issued and outstanding as of December 31, 2018 and December 31, 2017 0 0 Common stock: $0.01 par value, 349,000 shares authorized as of December 31, 2018 and December 31, 2017; 270,955 and 171,224 shares issued and outstanding as of December 31, 2018, respectively; 269,335 and 180,832 shares issued and outstanding as of December 31, 2017, respectively 2,709 2,693 Treasury stock: at cost, 99,731 and 88,504 shares as of December 31, 2018 and December 31, 2017, respectively (460,543) (322,735)Additional paid-in capital 1,881,494 1,781,059 Retained earnings (accumulated deficit) 132,842 (338,150)Accumulated other comprehensive loss (5,389) (1,985)Total Allscripts Healthcare Solutions, Inc.'s stockholders' equity 1,551,113 1,120,882 Non-controlling interest 29,314 39,190 Total stockholders’ equity 1,580,427 1,160,072 Total liabilities and stockholders’ equity $3,181,484 $4,230,150 The accompanying notes are an integral part of these consolidated financial statements. 58 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (In thousands, except per share amounts) 2018 2017 2016 Revenue: Software delivery, support and maintenance $1,128,263 $958,187 $899,299 Client services 621,699 539,521 486,770 Total revenue 1,749,962 1,497,708 1,386,069 Cost of revenue: Software delivery, support and maintenance 357,039 295,593 276,401 Client services 565,504 484,591 437,154 Amortization of software development and acquisition-related assets 102,876 84,725 71,215 Total cost of revenue 1,025,419 864,909 784,770 Gross profit 724,543 632,799 601,299 Selling, general and administrative expenses 450,967 400,688 334,521 Research and development 268,409 202,282 178,534 Asset impairment charges 58,166 0 4,650 Goodwill impairment charge 13,466 0 0 Amortization of intangible and acquisition-related assets 26,587 17,345 15,884 (Loss) income from operations (93,052) 12,484 67,710 Interest expense (50,914) (37,540) (29,478)Other income (loss), net 74 (512) 829 Gain on sale of businesses, net 172,258 0 0 Impairment of long-term investments (15,487) (165,290) 0 Equity in net income (loss) of unconsolidated investments 259 821 (7,501)Income (loss) from continuing operations before income taxes 13,138 (190,037) 31,560 Income tax (provision) benefit (469) 5,514 (309)Income (loss) from continuing operations, net of tax 12,669 (184,523) 31,251 Loss from discontinued operations (72,836) (11,915) (46,344)Gain on sale of Netsmart 500,471 0 0 Income tax effect on discontinued operations (32,497) 42,263 18,123 Income (loss) from discontinued operations, net of tax 395,138 30,348 (28,221)Net income (loss) 407,807 (154,175) 3,030 Less: Net loss (income) attributable to non-controlling interests 4,527 1,566 (146)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations (48,594) (43,850) (28,536)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $363,740 $(196,459) $(25,652) Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share: Basic Continuing operations $0.10 $(1.02) $0.17 Discontinued operations 1.97 (0.07) (0.31)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $2.07 $(1.09) $(0.14) Diluted Continuing operations $0.10 $(1.02) $0.17 Discontinued operations 1.94 (0.07) (0.31)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders per share $2.04 $(1.09) $(0.14)The accompanying notes are an integral part of these consolidated financial statements. 59 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, (In thousands) 2018 2017 2016 Net income (loss) $407,807 $(154,175) $3,030 Other comprehensive (loss) income: Foreign currency translation adjustments (2,908) 3,352 (1,528)Change in unrealized gain (loss) on available for sale securities 0 56,359 (56,359)Change in fair value of derivatives qualifying as cash flow hedges (873) 114 597 Other comprehensive (loss) income before income tax (provision) benefit (3,781) 59,825 (57,290)Income tax benefit (provision) related to items in other comprehensive income (loss) 377 19 (297)Total other comprehensive (loss) income (3,404) 59,844 (57,587)Comprehensive income (loss) 404,403 (94,331) (54,557)Less: Comprehensive loss (income) attributable to non-controlling interests 4,527 1,566 (146)Comprehensive income (loss), net $408,930 $(92,765) $(54,703) The accompanying notes are an integral part of these consolidated financial statements. 60 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Year Ended December 31, (In thousands) 2018 2017 2016 Number of Common Shares Issued Balance at beginning of year 269,335 267,997 266,545 Common stock issued under stock compensation plans, net of shares withheld for employee taxes 1,620 1,338 1,452 Balance at end of year 270,955 269,335 267,997 Common Stock Balance at beginning of year $2,693 $2,680 $2,665 Common stock issued under stock compensation plans, net of shares withheld for employee taxes 16 13 15 Balance at end of year $2,709 $2,693 $2,680 Number of Treasury Stock Shares Purchased Balance at beginning of year (88,504) (87,487) (77,237)Issuance of treasury stock 76 22 0 Purchase of treasury stock (11,303) (1,039) (10,250)Balance at end of year (99,731) (88,504) (87,487)Treasury Stock Balance at beginning of year $(322,735) $(310,993) $(189,753)Issuance of treasury stock 1,121 335 0 Purchase of treasury stock (138,929) (12,077) (121,240)Balance at end of year $(460,543) $(322,735) $(310,993)Additional Paid-In Capital Balance at beginning of year $1,781,059 $1,789,959 $1,789,449 Stock-based compensation 34,638 35,337 34,544 Common stock issued under stock compensation plans, net of shares withheld for employee taxes (8,197) (5,767) (8,133)Tax deficiency realized upon exercise of stock-based awards 0 0 (1,280)Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations 72,386 (43,850) (28,536)Subsidiary issuance of common stock 0 1,473 Issuance of treasury stock (61) (76) 0 Warrants issued 2,729 3,983 3,915 Acquisition of non-controlling interest (1,060) 0 0 Balance at end of year $1,881,494 $1,781,059 $1,789,959 Accumulated Deficit Balance at beginning of year $(338,150) $(187,351) $(190,235)Net (loss) income less net income attributable to non-controlling interests 412,334 (152,609) 2,884 Recognition of previously unrecognized excess tax benefits 0 1,810 0 ASC 606 implementation adjustments 58,658 0 0 Balance at end of year $132,842 $(338,150) $(187,351)Accumulated Other Comprehensive Loss Balance at beginning of year $(1,985) $(61,829) $(4,242)Foreign currency translation adjustments, net (2,908) 3,352 (1,528)Unrecognized gain on derivatives qualifying as cash flow hedges, net of tax (496) 72 361 Unrecognized gain (loss) on available for sale securities, net of tax 0 56,420 (56,420)Balance at end of year $(5,389) $(1,985) $(61,829)Non-controlling interest Balance at beginning of year $39,190 $40,735 $11,189 Acquisition of non-controlling interest (5,349) 21 29,400 Net (loss) income attributable to non-controlling interests (4,527) (1,566) 146 Balance at end of year $29,314 $39,190 $40,735 Total Stockholders’ Equity at beginning of year $1,160,072 $1,273,201 $1,419,073 Total Stockholders’ Equity at end of year $1,580,427 $1,160,072 $1,273,201The accompanying notes are an integral part of these consolidated financial statements. 61 ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (In thousands) 2018 2017 2016 Cash flows from operating activities: Net income (loss) $407,807 $(154,175) $3,030 Less: Income (loss) from discontinued operations 395,138 30,348 (28,221)Income (loss) from continuing operations 12,669 (184,523) 31,251 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 192,346 157,328 136,328 Stock-based compensation expense 34,638 36,540 37,093 Deferred taxes 4,144 (10,228) (4,520)Asset impairment charges 58,166 0 4,650 Goodwill impairment charge 13,466 0 0 Impairment of long-term investments 15,487 165,290 0 Equity in net income of unconsolidated investments (259) (821) 7,501 Gain on sale of businesses, net (172,258) 0 0 Other (losses) income, net (9,079) 3,726 3,526 Changes in operating assets and liabilities (net of businesses acquired): Accounts receivable and contract assets, net (109,134) (95,189) (8,918)Prepaid expenses and other assets (55,818) 13,219 4,454 Accounts payable (19,159) (19,785) 45,524 Accrued expenses 40,484 10,131 (2,774)Accrued compensation and benefits 13,440 18,717 (10,514)Deferred revenue 58,010 112,684 (11,418)Other liabilities 12,091 17,969 2,165 Net cash provided by operating activities - continuing operations 89,234 225,058 234,348 Net cash (used in) provided by operating activities - discontinued operations (21,343) 54,357 34,656 Net cash provided by operating activities 67,891 279,415 269,004 Cash flows from investing activities: Capital expenditures (31,309) (38,759) (32,107)Capitalized software (113,308) (118,241) (92,179)Cash paid for business acquisitions, net of cash acquired (177,233) (169,823) (99,837)Cash received from sale of businesses, net 807,764 0 0 Purchases of equity securities, other investments and related intangible assets (16,934) (5,606) (21,185)Other proceeds from investing activities 54 215 37 Net cash provided by (used in) investing activities - continuing operations 469,034 (332,214) (245,271)Net cash used in investing activities - discontinued operations (221,021) (80,758) (908,735)Net cash provided by (used in) investing activities 248,013 (412,972) (1,154,006)Cash flows from financing activities: Proceeds from sale or issuance of common stock 1,283 1,568 84 Excess tax benefits from stock-based compensation 0 0 1,014 Taxes paid related to net share settlement of equity awards (9,466) (7,269) (8,204)Payments of capital lease obligations (553) (1,283) (370)Credit facility payments (713,751) (138,139) (155,170)Credit facility borrowings, net of issuance costs 430,843 325,001 250,000 Repurchase of common stock (138,928) (12,077) (121,241)Payment of acquisition financing obligations (4,645) 0 0 Purchases of subsidiary shares owned by non-controlling interest (7,198) 0 0 Net cash (used in) provided by financing activities - continuing operations (442,415) 167,801 (33,887)Net cash provided by financing activities - discontinued operations 149,432 30,784 899,158 Net cash (used in) provided by financing activities (292,983) 198,585 865,271 Effect of exchange rate changes on cash and cash equivalents (624) 860 (532)Net increase (decrease) in cash and cash equivalents 22,297 65,888 (20,263)Cash, cash equivalents and restricted cash, beginning of period 162,498 96,610 116,873 Cash, cash equivalents and restricted cash, end of period 184,795 162,498 96,610 Less: Cash and cash equivalents included in current assets attributable to discontinued operations 0 (31,504) (25,064)Cash, cash equivalents and restricted cash, end of period, excluding discontinued operations $184,795 $130,994 $71,546The accompanying notes are an integral part of these consolidated financial statements. 62 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 subsidiaries 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 of America(“GAAP”) requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and theaccompanying notes. Actual results could differ materially from these estimates.Change in PresentationDuring 2018, we changed the presentation of certain bundled revenue streams and the associated cost of revenue which were previously included aspart of software delivery, support and maintenance revenue. Under the new presentation, these amounts are included as part of client services revenue andcost of revenue, respectively. We have recast previously reported revenue and cost of revenue amounts to conform with the new presentation. This change inpresentation had no impact on previously reported gross profit, net income (loss) or earnings (loss) per share.The following table illustrates the recast of cost of revenue and gross profit for the quarterly periods and the year ended December 31, 2018.Quarterly revenue previously reported during fiscal 2018 already reflected this change in presentation. Quarter ended Year ended (In thousands) March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 December 31, 2018 Cost of revenue reclassification: Software delivery, support and maintenance $(4,033) $(7,202) $(6,394) $(6,400) $(24,029) Client services 4,033 7,202 6,394 6,400 24,029 Amortization of software development and acquisition-related assets 0 0 0 0 0 Total cost of revenue: 0 0 0 0 0 Gross profit impact: Software delivery, support and maintenance (4,033) (7,202) (6,394) (6,400) (24,029) Client services 4,033 7,202 6,394 6,400 24,029 Total gross profit $0 $0 $0 $0 $0 63 The following table illustrates the recast for revenue and associated cost of revenue for the quarterly periods and the year ended December 31, 2017: Quarter ended Year ended (In thousands) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 December 31, 2017 Revenue reclassification: Software delivery, support and maintenance $(4,270) $(4,239) $(5,119) $(4,703) $(18,331) Client services 4,270 4,239 5,119 4,703 18,331 Total revenue 0 0 0 0 0 Cost of revenue reclassification: Software delivery, support and maintenance (5,056) (5,556) (5,454) (5,454) (21,520) Client services 5,056 5,556 5,454 5,454 21,520 Amortization of software development and acquisition-related assets 0 0 0 0 0 Total cost of revenue: 0 0 0 0 0 Gross profit impact: Software delivery, support and maintenance 786 1,317 335 751 3,189 Client services (786) (1,317) (335) (751) (3,189) Total gross profit $0 $0 $0 $0 $0The following table illustrates the recast of revenue and associated cost of revenue for the year ended December 31, 2016: Year ended (In thousands) December 31, 2016 Revenue reclassification: Software delivery, support and maintenance $(8,734) Client services 8,734 Total revenue 0 Cost of revenue reclassification: Software delivery, support and maintenance (17,831) Client services 17,831 Amortization of software development and acquisition-related assets 0 Total cost of revenue: 0 Gross profit impact: Software delivery, support and maintenance 9,097 Client services (9,097) Total gross profit $0 Revenue RecognitionWe adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2014-09, Revenue from Contracts with Customers:Topic 606 (“ASU 2014-09”) effective on January 1, 2018 using the modified retrospective method. ASU 2014-09 superseded nearly all previously existingrevenue recognition guidance under GAAP. Refer to Note 2, “Revenue from Contracts with Customers” for detailed discussion about our revenue recognitionaccounting policies. 64 Cash and Cash EquivalentsWe 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 Financial Assets and LiabilitiesInvestments classified as available for sale securities included certain equity instruments which have a readily determinable market value. Changes inmarket value for these instruments, excluding other-than-temporary impairments, are reflected in other comprehensive income. Realized gains and losses arerecorded using the specific identification method. We recognized other-than-temporary impairment charges of $142.2 million relating to these equityinstrument during the second quarter of 2017. During the third quarter of 2017, we recognized an additional $20.7 million loss upon the final disposition ofthese instruments in connection with the NantHealth patient/provider engagement solutions business acquisition (refer to Note 3, “Business Combinationsand Other Investments”). There were no other-than-temporary impairments related to our available for sale securities for the years ended December 31, 2018and 2016.We also have investments in other equity investments for which it is not practicable to estimate fair value primarily because of their illiquidity andrestricted marketability. Such investments are accounted under the cost and equity methods of accounting. Refer to Note 3, “Business Combinations andOther Investments” for additional information about these investments.Our long-term financial liabilities include borrowings outstanding under our Senior Secured Credit Facility (as defined in Note 8, “Debt”), withcarrying values that approximate fair value since the variable interest rates approximate current market rates. In addition, as of December 31, 2018, the fairvalue of the 1.25% Notes (as defined in Note 8, “Debt”) was approximately equal to the 1.25% Notes’ principal balance (or par). We utilized the 1.25%Notes’ market trading prices near December 31, 2018 in making this fair value assessment. See Note 8, “Debt” for further information regarding our long-termfinancial liabilities.Derivative Financial InstrumentsDerivative 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 14,“Derivative Financial Instruments” for information regarding gains and losses from derivative instruments during the years ended December 31, 2018, 2017and 2016.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. 65 Fixed AssetsFixed assets are stated at cost. Depreciation and amortization are computed under 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, an impairment lossequal to the excess will be recorded not to exceed the carrying amount of goodwill assigned to the reporting unit. The recoverability of indefinite-livedintangible assets is assessed by comparison of the carrying value of an asset to its estimated fair value. If we determine that the carrying value of an assetexceeds its estimated fair value, an impairment loss equal to the excess will 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 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.In accordance with GAAP, definite-lived intangible assets are required to 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 their 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. 66 Software Development CostsWe capitalize purchased software upon acquisition if it is accounted for as internal-use software or if it meets the future alternative use criteria. Wecapitalize incurred labor costs for software development from the time technological feasibility of the software is established, or when the preliminary projectphase is completed in the case of internal-use software, until the software is available for general release. Research and development costs and other computersoftware maintenance costs related to software development are expensed as incurred. We estimate the useful life of our capitalized software and amortize itsvalue over that estimated life. If the actual useful life is shorter than our estimated useful life, we will amortize the remaining book value over the remaininguseful life 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. Uponthe availability 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 that the value of the capitalizedsoftware could not be recovered, a write-down of the value of the capitalized software to its recoverable value is recorded as a charge to earnings.The unamortized balances of capitalized software were as follows: December 31, (In thousands) 2018 2017 Software development costs $317,637 $280,146 Less: accumulated amortization (107,977) (85,301)Software development costs, net $209,660 $194,845Capitalized 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) 2018 2017 2016 Capitalized software development costs $113,308 $94,740 $115,710 Write-offs and divestitures of capitalized software development costs $34,083 $0 $4,625 Amortization of capitalized software development costs $64,409 $51,589 $40,764 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 IRS and other tax authorities. A change in the assessment ofthe outcomes of such matters could materially impact our consolidated financial statements. 67 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.Stock-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. We measure stock-based compensationcost at the grant date based on the fair value of the award and recognize the expense over the requisite service period typically on a straight-line basis, net ofestimated forfeitures. We recognize stock-based compensation cost for awards with performance conditions if and when we conclude that it is probable thatthe performance conditions will be achieved. The fair value of service-based restricted stock units and restricted stock awards is measured at their underlyingclosing share price on the date of grant. The fair value of market-based restricted stock units is measured using the Monte Carlo pricing model. The netproceeds from stock-based compensation activities are reflected as a financing activity within the accompanying consolidated statements of cash flows. Wesettle employee stock option exercises and stock awards with newly issued common shares. Refer to Note 10, “Stock Award Plans” for detailed discussionabout our stock-based incentive plans.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) 2018 2017 2016 Company contributions to employee benefit plans $29,393 $18,861 $18,329Foreign 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 14, “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.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, 2018, 2017 and 2016. No client represented more than 10% ofaccounts receivable as of December 31, 2018 or 2017. 68 Recently Adopted Accounting PronouncementsIn 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 (i.e., the entity’s own credit risk), 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. We adopted ASU 2016-01 effective January 1, 2018 and there was no immediate impactupon adoption. Refer to Note 3, “Business Combinations and Other Investments” for additional information regarding our unconsolidated equityinvestments.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. We adopted ASU 2017-01 effective January 1, 2018 and there was no immediate 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. We adopted ASU 2017-04 on October 1, 2018 on a prospective basis and applied thisnew guidance as part of our annual goodwill assessment performed during the fourth quarter of 2018.In August 2018, the FASB issued Accounting Standards Update No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic350-40)” (“ASU 2018-15”), which discusses customer accounting for implementation costs incurred in a cloud computing arrangement that is a servicecontract. ASU 2018-15 requires an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 todetermine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. Training costs and certain dataconversion costs that cannot be capitalized under Subtopic 350-40 also cannot be capitalized for a hosting arrangement that is a service contract. Costs forimplementation activities in the application development state are capitalized depending on the nature of the costs, while costs incurred during preliminarystages are expensed. ASU 2018-15 requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract overthe term of the hosting arrangement and apply existing impairment guidance in Subtopic 350-40 to the capitalized implementation costs related to eachmodule or component of a hosting arrangement that is a service contract. ASU 2018-15 also requires the entity to present the expense related to thecapitalized implementation costs in the same line item in the statement of operations as the fees associated with the hosting element of the arrangement andclassify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with thehosting element. The entity is required to present the capitalized implementation costs in the balance sheet in the same line item that a prepayment for thehosting arrangement fees would be presented. ASU 2018-15 is effective for interim and annual periods beginning after December 15, 2019. Early adoption ispermitted and can be applied either retrospectively or prospectively. We early adopted ASU 2018-15 on a prospective basis effective October 1, 2018. Therewas no significant impact to the consolidated financial statements upon adoption.Accounting Pronouncements Not Yet AdoptedIn February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), intended to improvefinancial reporting about leasing transactions. The new guidance will require entities that lease assets to recognize on their balance sheets the assets andliabilities for the rights and obligations created by those leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective forinterim and annual periods beginning after December 15, 2018 with early adoption permitted. We plan to adopt ASU 2016-02 effective January 1, 2019using the cumulative-effect adjustment transition method approved by the FASB in July 2018. We are in the process of implementing changes to ourprocesses and internal controls to meet the new reporting and disclosure requirements. We have implemented a software tool to assist us in the calculation ofthe amount of additional assets and liabilities to be included on our consolidated balance sheet related to leases currently classified as operating leases withdurations greater than twelve months. In addition to existing lease agreements, we have also reviewed service contracts and other agreements to determine ifthey contain an embedded lease. We currently expect to record right of use assets of approximately $105 million and lease liabilities of approximately $125million upon the adoption of ASU 2016-02. We do not anticipate any material changes to our operating results or liquidity as a result of the adoption of ASU2016-12. 69 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 losses, the losses will be recognized as allowances rather than reductions in the amortizedcost of the securities. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Earlyadoption is permitted for fiscal years beginning after December 15, 2018. We are currently in the process of evaluating this new guidance, which we expect tohave an impact on our consolidated financial statements and results of operations.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 ASU 2017-12 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, with early adoption permitted. We plan toadopt ASU 2017-12 effective January 1, 2019 and do not expect any immediate impact upon adoption.In June 2018, the FASB issued Accounting Standards Update No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements toNonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which expands the scope of Topic 718 to include share-based payment transactions foracquiring goods and services from nonemployees. ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantoracquires goods or services to be used or consumed in its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods orservices to customers as part of a contract accounted for under ASC 606. ASU 2018-07 is effective for interim and annual periods beginning after December15, 2018. We plan to adopt ASU 2018-07 effective January 1, 2019 and do not expect any immediate impact upon adoption.In August 2018, the FASB issued Accounting Standards Update No. 2018-13, “Fair Value Measurement (Topic 820) – Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which eliminates, adds and modifies certain disclosurerequirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputsfor Level 3 fair value instruments. ASU 2018-13 will be effective for all entities for interim and annual periods beginning after December 15, 2019, with earlyadoption permitted. We are currently evaluating the impact of this accounting guidance.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. 70 2. Revenue from Contracts with CustomersOur two primary revenue streams are (i) software delivery, support and maintenance and (ii) client services. Software delivery, support andmaintenance revenue consists of all of our proprietary software sales (either under a perpetual or term license delivery model), subscription-based softwaresales, transaction-related revenue, the resale of hardware and third-party software and revenue from post-contract client support and maintenance services,which include telephone support services, maintaining and upgrading software and ongoing enhanced maintenance. Client services revenue consists ofrevenue from managed services solutions, such as private cloud hosting, outsourcing and revenue cycle management, as well as other client services andproject-based revenue from implementation, training and consulting services. For other clients, we offer an outsourced service in which we assume partial tototal responsibility for a healthcare organization’s IT operations using our employees.Adoption of New Revenue Standard (“ASC 606”)In May 2014, the FASB issued ASC 606 to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASC 606is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to bereceived for those goods or services. ASC 606 defines a five-step process to achieve this principle and, in doing so, it is possible more judgment and estimatesmay be required within the revenue recognition process than required under the previous FASB Accounting Standards Codification 605, RevenueRecognition (“ASC 605”), including identifying performance obligations in the contract, estimating the amount of variable consideration to include in thetransaction price and allocating the transaction price to each separate performance obligation and accounting for significant financing components.Additionally, ASC 606 provides guidance related to costs of obtaining a contract with a customer that an entity expects to recover.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 adopted the standard effective on January 1, 2018 using the modified retrospective method. We also implemented internal controls, andcontinue to refine our updated processes and key systems to allow us to continue to comply with the new requirements.The reported results for the year ended December 31, 2018 reflect the adoption of ASC 606. The comparative information for the years endedDecember 31, 2017 and 2016 has not been restated and will continue to be reported under the previous guidance of ASC 605, which was in effect duringthose periods. The table below reflects the cumulative adjustments that were made to balances previously reported in the consolidated balance sheet as ofDecember 31, 2017. As Reported Adjustments Adjusted (In thousands) December 31, 2017 due to ASC 606 January 1, 2018 Accounts receivable, net $492,560 $(19,290) $473,270 Contract assets 0 77,791 77,791 Prepaid expenses and other current assets 106,455 7,381 113,836 Deferred revenue, current 478,574 (12,810) 465,764 Deferred revenue, long-term 19,208 0 19,208 Deferred taxes, net 23,258 20,034 43,292 Accumulated deficit (338,150) 58,658 (279,492) The following tables compare the reported consolidated balance sheet and statement of operations for the year ended December 31, 2018 to thepro-forma amounts assuming the previous guidance of ASC 605 had been in effect: December 31, 2018 (In thousands) As reportedunder ASC 606 Adjustments due toASC 606 Pro formaunder ASC 605 Accounts receivable, net $465,264 $54,489 $519,753 Contract assets 66,451 (66,451) 0 Prepaid expenses and other current assets 142,455 (7,719) 134,736 Contract assets - long-term 71,879 (71,879) 0 Deferred revenue, current 466,797 14,691 481,488 Deferred taxes, net 58,470 (27,195) 31,275 Retained earnings 132,842 (79,056) 53,786 71 Twelve Months Ended December, 31, 2018 (In thousands, except per share amounts) As reportedunder ASC 606 Adjustments due toASC 606 Pro formaunder ASC 605 Software delivery, support and maintenance $1,128,263 $(21,780) $1,106,483 Client services 621,699 (6,185) 615,514 Gross profit 724,543 (26,906) 697,637 Selling, general and administrative expenses 450,967 (176) 450,791 Loss from operations (93,052) (26,730) (119,782)Income (loss) from continuing operations before income taxes 13,138 (27,559) (14,421)Income tax (provision) benefit (469) 7,160 6,691 Income (loss) from continuing operations, net of tax 12,669 (20,399) (7,730)Net income attributable to Allscripts Healthcare Solutions, Inc. stockholders $363,740 $(20,399) $343,341 Earnings per share - basic attributable to Allscripts Healthcare Solutions, Inc. stockholders $2.07 $(0.12) $1.95 Earnings per share - diluted attributable to Allscripts Healthcare Solutions, Inc. stockholders $2.04 $(0.11) $1.93 The recognition of revenue related to hardware sales, software-as-a-service-based offerings, client services, electronic data interchange services andmanaged services remained substantially unchanged under ASC 606. The adoption of ASC 606 resulted in an increase in contract assets driven by upfrontrecognition of revenue, rather than over the subscription period, from certain multi-year software subscription contracts that include both software licensesand software support and maintenance.Costs to Obtain or Fulfill a ContractUnder ASC 605, we only capitalized direct sales commissions that were specifically associated with new or renewal contracts. The new revenuerecognition guidance under ASC 606 requires the capitalization of all incremental costs of obtaining a contract with a customer that an entity expects torecover. As part of our implementation efforts, we identified certain indirect commissions and other payments that were eligible for capitalization under ASC606 as they were incremental costs solely associated with new or renewal contracts that we expected to recover. Certain costs related to the fulfillment ofcontracts are also capitalized. As a result, we recorded a deferral for such costs of $5.5 million, net of tax, upon adoption of the new guidance on January 1,2018, which was included in the cumulative effect of initially applying ASC 606.Capitalized costs to obtain or fulfill a contract are amortized over periods ranging from two to six years which represent the initial contract term or alonger period, if renewals are expected and the renewal commission, if any, is not commensurate with the initial commission. We classify such capitalizedcosts as current or non-current based on the expected timing of expense recognition. The current and non-current portions are included in Prepaid expensesand other current assets, and Other assets, respectively, in our consolidated balance sheets.At December 31, 2018, we had capitalized costs to obtain or fulfill a contract of $24.7 million in Prepaid and other current assets and $33.8 millionin Other assets. During the year ended December 31, 2018, we recognized $29.7 million of amortization expense related to such capitalized costs, which isincluded in selling, general and administrative expenses.Contract BalancesThe timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivables, contract assets and customeradvances and deposits. Accounts receivable, net includes both billed and unbilled amounts where the right to receive payment is unconditional and onlysubject to the passage of time. Contract assets include amounts where revenue recognized exceeds the amount billed to the customer and the right to paymentis not solely subject to the passage of time. Deferred revenue includes advanced payments and billings in excess of revenue recognized. Our contract assetsand deferred revenue are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as currentor long-term based on the timing of when we expect to complete the related performance obligations and bill the customer. Deferred revenue is classified ascurrent or long-term based on the timing of when we expect to recognize revenue.In general, with the exception of fixed fee project-based client service offerings (such as implementation services), we sell our software solutions ondate-based milestone events where control transfers and use of the software occurs on the delivery date but the associated payments for the software licenseoccur on future milestone dates. In such instances, unbilled amounts are included in contract assets since our right to receive payment is conditional upon thecontinued functionality of the software and the provision of ongoing support and maintenance. Our fixed fee project-based client service offerings typicallyrequire us to provide the services with either a significant portion or all amounts due prior to service completion. Since our right to payment is notunconditional, amounts associated with work prior to the completion date are also deemed to be contract assets. 72 Performance ObligationsA performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of account in ASC 606. Aperformance obligation is considered distinct when both (i) a customer can benefit from the product or service either on its own or together with otherresources that are readily available to the customer and (ii) the promised product or service is separately identifiable from other promises in the contract.Activities related to the fulfillment of a contract that do not transfer products or services to a customer, such as contract preparation or legal review of contractterms, are not deemed to be performance obligations. Based on the similarities in the definitions of a “deliverable” under ASC 605 and “performanceobligation” under ASC 606, our identification of performance obligations under ASC 606 did not result in a significant divergence from our existingidentification approach.We generally sell our solutions through multi-element arrangements where we provide the customer with (1) software license, (2) support andmaintenance, (3) embedded content such as third-party software and (4) client services. Incremental solutions, such as hardware and managed services arealso provided based upon a customer’s preferences and requirements. We deem that a customer is typically able to benefit from a product or service on itsown or together with readily available resources when we sell such product or service on a standalone basis. We have historically sold the majority of ourperformance obligations, with the exception of software licenses, on a standalone basis. Incremental solutions, such as hardware, client services and managedservices, are often negotiated and fulfilled on an independent sales order basis as customer needs and requirements change over the course of a relationshipperiod. In addition, support and maintenance and embedded content are provided on a stand-alone basis through the renewal process.One of the product offerings under our CareInMotionTM platform requires significant client service customization to enable the functionality of thesoftware before the customer can obtain benefit from using the product. The significant customization cannot be performed by a third party. Softwareproducts and client services are separately identifiable in these contracts, but the performance obligations are not considered distinct in the context of thecontract. Therefore, these products and services are treated as a combined performance obligation. Additionally, our support and maintenance obligations include multiple discrete performance obligations, with the two largest being unspecifiedproduct upgrades or enhancements, and technical support, which can be offered at various points during a contract period. We believe that the multiplediscrete performance obligations within our overall support and maintenance obligations can be viewed as a single performance obligation since both theunspecified product upgrades and technical support are activities to fulfill the maintenance performance obligation and are rendered concurrently.The breakdown of revenue recognized related based on the origination of performance obligations and elected accounting expedients is presentedin the table below: (In thousands) Three MonthsEndedMarch 31, 2018 Three MonthsEndedJune 30, 2018 Three MonthsEndedSeptember 30, 2018 Three MonthsEndedDecember 31, 2018 Revenue related to deferred revenue balance at beginning of period $181,398 $196,163 $153,151 $141,127 Revenue related to new performance obligations satisfied during the period 200,232 180,001 225,641 237,963 Revenue recognized under "right-to-invoice" expedient 49,403 62,533 51,288 60,593 Reimbursed travel expenses, shipping and other revenue 2,689 2,767 2,350 2,663 Total revenue $433,722 $441,464 $432,430 $442,346 The aggregate amount of contract transaction price related to remaining unsatisfied performance obligations (commonly referred to as “backlog”)represents contracted revenue that has not yet been recognized and includes both deferred revenue and amounts that will be invoiced and recognized asrevenue in future periods. Total backlog equaled $3.9 billion as of December 31, 2018, of which we expect to recognize approximately 39% over the next 12months, and the remaining 61% thereafter.Transaction price and allocation 73 Our contracts with customers often include multiple distinct performance obligations such as software licenses, software support and maintenance,hardware, client services, private cloud hosting and Software-as-a-Service. We adjust the transaction price on a contract-by-contract basis for (i) the effect ofthe time value of money when a contract has a significant financing component and/or (ii) customer discounts and incentives deemed to be variableconsideration. We then allocate the contract transaction price to the distinct performance obligations in the contract. Such allocation is based on the stand-alone selling price (“SSP”) of each distinct performance obligation. The transaction price allocated to each distinct performance obligation is adjusted fordiscounts offered to customers that are outside of the Company’s established sufficiently narrow ranges for distinct performance obligations’ SSPs on arelative SSP basis.For each distinct performance obligation, we use observable stand-alone pricing to determine the SSP. Such observable SSPs are based upon ourlisted sales prices and consider discounts offered to customers. In instances where SSP is not directly observable because we do not sell the product or serviceseparately, we determine the SSP through the residual approach or cost-plus margin models using information that includes market conditions and otherobservable inputs. Such instances primarily relate to sales of new products and service offerings and our acute suite of software licenses. Our acute suite ofsoftware licenses is sold to a diverse set of customers for a broad range of amounts and, therefore, SSP is not discernible from past transactions due to the highvariability of selling prices.Our products and services are generally not sold with a right of return, except for certain hardware sales, which are not material to our consolidatedrevenue. We may provide credits or incentives on a contract-by-contract basis which are accounted for either as a material right or as variable consideration,respectively, when allocating the transaction price. Such credits and incentives have historically not been significant. We do not provide additionalwarranties to clients above and beyond warranties that the solutions purchased will perform in accordance with the agreed-upon specifications. On rareoccasions, when additional warranties are granted, we evaluate on a case-by-case basis whether the additional warranty granted represents a separateperformance obligation.Accounting Policy Elections and Practical ExpedientsWe have elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value-added) assessed by government authoritiesand collected from a customer. Therefore, revenue is recognized net of such taxes.Within the normal course of business, we contract with customers to deliver and ship tangible products, such as computer hardware. In thesesituations, the control of the products transfers to the customer when the product reaches the shipper based on free on board (FOB) shipping clauses. We haveelected to use the practical expedient allowed under ASC 606 to account for shipping and handling activities that occur after the customer has obtainedcontrol of a promised good as fulfillment costs rather than as an additional promised service and, therefore, we do not allocate a portion of the transactionprice to a shipping service obligation. Instead, we record as revenue any amounts billed to customers for shipping and handling costs and record as cost ofrevenue the actual shipping costs incurred.Additionally, our standard contract terms allow for the reimbursement by a customer for certain travel expenses necessary to provide on-site servicesto the customer, such as implementation and training. Such reimbursed travel expenses are reported on a gross basis. Since such reimbursed travel expensesdo not represent a distinct good or service nor incremental value provided to a customer, a performance obligation is deemed not to exist. In certainsituations, however, when the allowable reimbursable expenses amount is capped, we believe that such cap represents the most likely amount of variableconsideration and the capped amount is included in the total contract transaction price.In accordance with ASC 606, if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to thecustomer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice (“right-to-invoice” practical expedient). We have elected to utilize this expedient as it relates to transaction-based services (such as revenue cycle management) andelectronic data interchange transactions. 74 Revenue RecognitionWe recognize revenue only when we satisfy an identified performance obligation (or bundle of obligations) by transferring control of a promisedproduct or service to a customer. We consider a product or service to be transferred when a customer obtains control because a customer has sole possession ofthe right to use (or the right to direct the use of) the product or service for the remainder of its economic life or to consume the product or service in its ownoperations. We evaluate the transfer of control primarily from the customer’s perspective as this reduces the risk that revenue is recognized for activities thatdo not transfer control to the customer.The majority of our revenue is recognized over time because a customer continuously and simultaneously receives and consumes the benefits of ourperformance. The exceptions to this pattern are our sales of perpetual and term software licenses, and hardware, where we determined that a customer obtainscontrol of the asset upon granting of access, delivery or shipment. The following table summarizes the pattern of revenue recognition for our most significantperformance obligations: Performance ObligationRevenue TypeRecurring or Non-recurring NatureRevenueRecognition PatternMeasure of progressSupport and maintenance("SMA")Software delivery, support andmaintenanceRecurringOver timeOutput method (time elapsed) – revenue isrecognized ratably over the contract termSoftware as a service ("SaaS")Software delivery, support andmaintenanceRecurringOver timeOutput method (time elapsed) – revenue isrecognized ratably over the contract termPrivate cloud hostingClient servicesRecurringOver timeOutput method (time elapsed) – revenue isrecognized ratably over the contract termClient/Education servicesClient servicesNon-recurringOver timeInput method (cost to cost) – revenue is recognizedproportionally over the service implementationbased on hoursOutsourcing servicesClient servicesRecurringOver timeInput method (cost to cost) – revenue is recognizedproportionally over the outsourcing periodPayerpath(transaction volume)Software delivery, support andmaintenanceRecurringOver timeOutput method ("right-to-invoice" practicalexpedient) – value transferred to the customer isreflected on invoicing.Software licensesSoftware delivery, support andmaintenanceNon-recurringPoint in timeUpon electronic deliveryHardwareSoftware delivery, support andmaintenanceNon-recurringPoint in timeUpon shipmentRecurring software delivery, support and maintenance revenue consists of recurring subscription-based software sales, support and maintenancerevenue, and recurring transaction-related revenue. Non-recurring software delivery, support and maintenance revenue consists of perpetual software licensessales, resale of hardware and non-recurring transaction-related revenue. Recurring client services revenue consists of revenue from managed servicessolutions, such as outsourcing, private cloud hosting and revenue cycle management. Non-recurring client services revenue consists of project-based clientservices revenue.When evaluating our SMA, SaaS and private cloud hosting performance obligations, we noted that these obligations are fulfilled as stand-readyobligations to perform and, therefore, we deem the obligations to be satisfied evenly over time. Client services, such as those relating to implementation,consulting, training or education, are generally not fulfilled evenly over the contract period but rather over a shorter timeline where work effort can rise ordecline based upon stages of the project work effort. These client services are typically quoted to a customer as a fixed fee amount that covers theimplementation effort. Delivery progress for these services is measured by establishing an approved cost budget with labor hour inputs utilized to gaugepercentage of completion of the work effort. Therefore, revenue for our client, education and outsourcing services is recognized proportionally with theprogress of the implementation work effort.Payerpath transaction volume and other transaction-based service obligations, such as revenue cycle management services, are fulfilled over timebut are not provided evenly over the contract period and reliable inputs are not available to track progress of completion. We determined that value isprovided to the customer throughout the contract period and the pricing charged to the customer varies on a monthly basis, based upon the volume of thecustomer’s transactions processed in that respective period. The invoiced amount to the customer represents this value and, accordingly, the practicalexpedient to recognize revenue based upon invoicing is most appropriate. 75 We considered the specific implementation guidance for accounting for licenses of intellectual property (“IP”) to determine if point in time or overtime recognition was more appropriate. The first step in the licensing framework is to determine whether the license is distinct or combined with other goodsand services. For most of our software licensing products, the licenses are distinct, with the exception of one of our product offerings underour CareInMotionTM platform, which requires a significant client service customization. In all instances, we determined that we are offering functional IP ascompared with a symbolic IP. Functional IP is a right to use IP because the IP has standalone functionality and a customer can use the IP as it exists at a pointin time.Disaggregation of RevenueWe disaggregate our revenue from contracts with customers based on the type of revenue and nature of revenue stream, as we believe thosecategories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The below tablessummarize revenue by type and nature of revenue stream as well as by our reportable segments: Year Ended December 31, (In thousands) 2018 2017 2016 Revenue: Software delivery, support and maintenance Recurring revenue $967,990 $802,080 $752,084 Non-recurring revenue 160,273 156,107 147,215 Total software delivery, support and maintenance 1,128,263 958,187 899,299 Client services Recurring revenue $443,752 $374,640 $324,635 Non-recurring revenue 177,947 164,881 162,135 Total client services 621,699 539,521 486,770 Total revenue $1,749,962 $1,497,708 $1,386,069 Twelve Months Ended December 31, 2018 (In thousands) Clinical andFinancial Solutions Population Health Unallocated Total Software delivery, support and maintenance $958,144 $168,275 $1,844 $1,128,263 Client services 607,843 22,431 (8,575) 621,699 Total revenue $1,565,987 $190,706 $(6,731) $1,749,962 Twelve Months Ended December 31, 2017 (In thousands) Clinical andFinancial Solutions Population Health Unallocated Total Software delivery, support and maintenance $808,611 $160,015 $(10,439) $958,187 Client services 528,419 13,794 (2,692) 539,521 Total revenue $1,337,030 $173,809 $(13,131) $1,497,708 Twelve Months Ended December 31, 2016 (In thousands) Clinical andFinancial Solutions Population Health Unallocated Total Software delivery, support and maintenance $710,679 $165,532 $23,088 $899,299 Client services 472,517 11,862 2,391 486,770 Total revenue $1,183,196 $177,394 $25,479 $1,386,069 76 3. Business Combinations and Other Investments2018 Business Combinations and DivestituresAcquisition of Health GridOn May 18, 2018, we acquired all the capital stock of Health Grid Holding Company, a Delaware corporation (“Health Grid”), for a total price of$110.0 million, consisting of an initial payment of $60.0 million plus up to an aggregate of $50.0 million in future earnout payments based on Health Gridachieving certain revenue targets over the three years following the acquisition. At the time of closing, we pre-paid $10.0 million of the earnout paymentsand the remaining contingent consideration of up to $40.0 million was valued at $23.9 million. Health Grid is a patient engagement solutions provider thatassists independent providers, hospitals and health systems to improve patient interactions and satisfaction. We have integrated the capabilities of HealthGrid into our FollowMyHealth® platform. The consideration paid for Health Grid is shown below: (In thousands) Aggregate purchase price $60,000 First earnout payment paid by Allscripts 10,000 Fair value of contingent consideration payment 23,915 Closing purchase price adjustments 2,009 Total consideration paid for Health Grid $95,924 The allocation of the fair value of the consideration transferred as of the acquisition date of May 18, 2018 is shown in the table below. Theallocation of purchase price was finalized in the fourth quarter of 2018. The goodwill is not expected to be deductible for tax purposes. (In thousands) Cash and cash equivalents $1,783 Accounts receivable, net 3,968 Prepaid expenses and other assets 185 Fixed assets 200 Intangible assets 41,000 Goodwill 53,953 Accounts payable and accrued expenses (478)Deferred revenue (700)Long-term deferred tax liability (3,987)Net assets acquired $95,924 The following table summarizes the preliminary fair values of the identifiable intangible assets and their estimated useful lives: Useful Life Fair Value Description (In years) (In thousands) Customer Relationships 15 $28,000 Technology 8 13,000 $41,000 77 We incurred $0.5 million of acquisition costs which are included in selling, general and administrative expenses in the accompanying consolidatedstatement of operations for the year ended December 31, 2018. The results of operations of Health Grid were not material to our consolidated results ofoperations for the year ended December 31, 2018.Acquisition of Practice Fusion, Inc.On February 13, 2018, we completed the acquisition of Practice Fusion, Inc., a Delaware corporation (“Practice Fusion”), for aggregate considerationof $113.6 million paid in cash. Practice Fusion offers an affordable certified cloud-based electronic health record (“EHR”) for traditionally hard-to-reachsmall, independent physician practices. The consideration paid for Practice Fusion is shown below: (In thousands) Aggregate purchase price $100,000 Add: Net working capital surplus 373 Add: Closing cash 14,951 Less: Adjustment to assumed indebtedness (1,684)Total consideration paid for Practice Fusion $113,640 The allocation of the fair value of the consideration transferred as of the acquisition date of February 13, 2018 is shown in the table below. Theallocation of the purchase price was finalized during the fourth quarter of 2018. The goodwill is not expected to be deductible for tax purposes. (In thousands) Cash and cash equivalents $14,951 Accounts receivable, net 13,328 Prepaid expenses and other current assets 809 Fixed assets 1,764 Intangible assets 67,100 Goodwill 35,092 Other assets 42 Accounts payable and accrued expenses (7,378)Deferred revenue (2,400)Long-term deferred tax liability (8,853)Other liabilities (815)Net assets acquired $113,640 The following table summarizes the fair values of the identifiable intangible assets and their estimated useful lives: Useful Life Fair Value Description (In years) (In thousands) Customer Relationships - Physician Practices 15 $29,000 Customer Relationships - Pharmaceutical Partners 20 19,400 Technology 8 14,800 Tradenames 10 3,900 $67,100 78 We incurred $1.2 million of acquisition costs which are included in selling, general and administrative expenses in the consolidated statement ofoperations for the year ended December 31, 2018. The results of operations of Practice Fusion were not material to our consolidated results of operations forthe year ended December 31, 2018.Netsmart LLC DivestitureOn December 31, 2018, we sold all of the Class A Common Units of Netsmart LLC, a Delaware limited liability company (“Netsmart”), owned by theCompany in exchange for $566.6 million, plus a final settlement as determined following the closing pursuant to the terms of the sales agreement. Netsmartwas originally acquired in April 2016 and we realized a pre-tax gain on sale of $500.5 million, which is included on the “Gain on sale of Netsmart” line inour consolidated statements of operations for the year ended December 31, 2018. The divestiture of Netsmart is being treated as a discontinued operation asof December 31, 2018. Refer to Note 16, “Discontinued operations” for further details regarding the historical assets, liabilities and results of operations ofNetsmart.Other Acquisitions and DivestituresOn June 15, 2018, we acquired all the outstanding minority interest in a third party for $6.9 million. We initially acquired a controlling interest inthe third party in April 2015. Therefore, this transaction was treated as an equity transaction and the cash payment is reported as part of cash flow fromfinancing activities in the consolidated statement of cash flows for the year ended December 31, 2018.On April 2, 2018, we sold substantially all of the assets of the Allscripts’ business providing hospitals and health systems document and othercontent management software and services generally known as “OneContent” to Hyland Software, Inc., an Ohio corporation (“Hyland”). Allscripts acquiredthe OneContent business during the fourth quarter of 2017 through the acquisition of the EIS Business (as defined below). Certain assets of Allscripts relatingto the OneContent business were excluded from the transaction and retained by Allscripts. In addition, Hyland assumed certain liabilities related to theOneContent business. The total consideration for the OneContent business was $260 million, which was subject to certain adjustments for liabilities assumedby Hyland and net working capital. We realized a pre-tax gain upon sale of $177.9 million which is included in the “Gain on sales of businesses, net” line inour consolidated statements of operations for the year ended December 31, 2018.On March 15, 2018, we contributed certain assets and liabilities of our Strategic Sourcing business unit, acquired as part of the acquisition of the EISBusiness in 2017, into a new entity together with $2.7 million of cash as additional consideration. In exchange for our contributions, we obtained a 35.7%interest in the new entity, which was valued at $4.0 million, and is included in Other assets in our consolidated balance sheet as of December 31, 2018. Thisinvestment is accounted for under the equity method of accounting. As a result of this transaction, we recognized an initial pre-tax loss of $0.9 million and$4.7 million in additional losses due to measurement period adjustments upon the finalization of carve-out balances, mainly related to accounts receivable.These losses are included on the “Gain on sale of businesses, net” line in our consolidated statements of operations for the year ended December 31, 2018.On February 6, 2018, we acquired all of the common stock of a cloud-based analytics software platform provider for a purchase price of $8.0 millionin cash. The allocation of the consideration is as follows: $1.1 million of intangible assets related to technology; $0.6 million to customer relationships; $6.6million of goodwill; $0.8 million to accounts receivable; deferred revenue of $0.6 million and $0.5 million of long-term deferred income tax liabilities. Theallocation was finalized in the fourth quarter of 2018. The acquired intangible asset related to technology will be amortized over 8 years using a method thatapproximates the pattern of economic benefits to be gained from the intangible asset. The customer relationship will be amortized over one year. Thegoodwill is not expected to be deductible for tax purposes. The results of operations of this acquisition were not material to our consolidated results ofoperations for the year ended December 31, 2018. 79 Pre-2018 Business Combination UpdatesAcquisition 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. Theallocation of the purchase price was finalized during the third quarter of 2018.Total consideration for the transaction was as follows: (In thousands) Cash $1,742 Add: Final net working capital surplus 1,022 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 $22,614 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. Theallocation has been finalized and 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 12,400 Goodwill 13,466 Other assets 204 Accounts payable and accrued expenses (1,477)Deferred revenue (9,205)Net assets acquired $22,614 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 $12,400 80 The NantHealth reporting unit incurred goodwill and intangible impairment losses and the existing commercial agreement was expensed during thefourth quarter of 2018. These losses were a result of an analysis of NantHealth’s fair market value conducted during our goodwill impairment review, which isannually performed during the fourth quarter. Refer to Note 6, “Goodwill and Intangible Assets” for further details.Acquisition of the Enterprise Information Solutions Business from McKesson CorporationOn October 2, 2017, we purchased McKesson Corporation’s Enterprise Information Solutions Business division (the “EIS Business”), which providescertain software solutions and services to hospitals and health systems, by acquiring all of the outstanding equity interests of two indirect, wholly-ownedsubsidiaries of McKesson. The acquisition of the EIS Business was based on a total enterprise value of $185 million as shown in the table below. The netconsideration paid was funded through incremental borrowings 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. The goodwill is expected to be deductible for tax purposes. Among the factors that contributed to apurchase price resulting in the recognition of goodwill were the expected growth and synergies that we believe will result from the integration of the EISbBusiness with our software solutions and services to hospitals and health systems. The following table summarizes the allocation of the purchase price,which was finalized during the fourth quarter of 2018, as of the acquisition date: (In thousands) Cash and cash equivalents $1,068 Accounts receivable, net 72,996 Prepaid expenses and other current assets 19,358 Fixed assets 9,808 Intangible assets 143,000 Goodwill 61,337 Other assets 1,601 Accounts payable and accrued expenses (34,285)Deferred revenue (102,523)Other liabilities (2,863)Net assets acquired $169,497 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 $80,800 Technology 7 58,400 Tradenames 7 3,800 $143,000 81 Acquisition costs related to the EIS Business acquisition totaled $4.8 million for the year ended December 31, 2017. These acquisitions costs areincluded in selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended 2017.Supplemental InformationThe 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, 2017,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.We also acquired the provider/patient engagement solutions business of NantHealth, Inc. (the “NantHealth business”) on August 25, 2017. The proforma results below give effect to the NantHealth business acquisition and the EIS Business acquisition as if they had occurred on January 1, 2017 byapplying pro forma adjustments attributable to these acquisitions to our historical financial results. (Unaudited)Year Ended December 31, (In thousands, except per share amounts) 2018 (2) 2017 Actual from NantHealth since acquisition date of August 25, 2017: Revenue n/a $6,268 Net loss n/a $(4,393) Actual from EIS Business since acquisition date of October 2, 2017: (1) Revenue n/a $77,046 Net loss n/a $(15,160) Supplemental pro forma data for combined entity: Revenue n/a $1,768,530 Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders n/a $(192,653)Loss per share, basic and diluted n/a $(1.07)______________________(1)Revenue and Net loss from the EIS Business excludes revenue and income from discontinued operations. Refer to Note 16, “Discontinued Operations”.(2)Pro forma information is not applicable as the results of NantHealth and the EIS Business were fully consolidated in consolidated statements of operations for the year endedDecember 31, 2018.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 for number of investees) at December 31, 2018 Cost December 31, 2018 December 31, 2017 Equity method investments (1) 8 $7,407 $10,667 $4,258 Cost method investments 5 37,874 25,923 22,020 Total long-term equity investments 13 $45,281 $36,590 $26,278 (1)Allscripts share of the earnings of our equity method investees is reported based on a one quarter lag. 82 Other Acquisitions and InvestmentsDuring 2018, we acquired certain non-marketable equity securities of two third parties and entered into a commercial agreement with one of the thirdparties for total consideration of $11.7 million. During 2018, we also acquired a $1.8 million non-marketable convertible note of a third party. The carryingvalue of these investment is $13.5 million and is included in the “Other assets” line in the consolidated balance sheets as of December 31, 2018. Theseinvestments are primarily accounted for under the cost method .During 2017, we acquired a $2.6 million non-marketable convertible note of a third party with which we have an existing investment accounted forunder the equity method. The carrying value of the convertible note was $2.6 million and was included in the “Other assets” line in the consolidated balancesheet as of December 31, 2017.During 2017, we acquired certain non-marketable equity securities of two third parties and entered into new commercial agreements with one of thesethird parties to license and distribute their products and services, for a total consideration of $2.8 million. Both of these investments are accounted for underthe cost method. The carrying value of these investments was $3.5 and $2.8 million as of December 31, 2018 and 2017, respectively, and is included in the“Other assets” line in the accompanying consolidated balance sheets.As of December 31, 2018, 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 InvestmentsWe recognized non-cash impairment charges of $15.5 million during the year ended December 31, 2018 related to two of our cost-method equityinvestments and a related note receivable. These charges equaled the cost bases of the investments and the related note receivable prior to the impairment.The non-cash impairment charges are included on the Impairment of long-term investments line in our consolidated statements of operations for the yearended December 31, 2018.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 on the Impairment of long-term investments line in our consolidated statement of operationsfor the year ended December 31, 2017. 4. 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. We held no Level 1 financial instruments at December31, 2018 or 2017.Level 2: Quoted prices for similar instruments in active markets with inputs that are observable, either directly or indirectly. Our Level 2 derivativefinancial instruments include foreign currency forward contracts valued based upon observable values of spot and forward foreign currency exchange rates.Refer to Note 14, “Derivative Financial Instruments,” for further information regarding these derivative financial instruments. 83 Level 3: Unobservable inputs or prices for which little or no market data exists. Our Level 3 financial instruments include derivative financialinstruments comprising the 1.25% Call Option asset and the 1.25% embedded cash conversion option liability (together the “1.25% Notes Call SpreadOverlay” as further described in Note 8, “Debt”) that are not actively traded. These derivative instruments were designed with the intent that changes in theirfair values would substantially offset, with limited net impact to our earnings. The sensitivity of changes in the unobservable inputs to the valuation pricingmodel used to value these instruments is not material to our consolidated results of operations. Refer to Note 14, “Derivative Financial Instruments,” forfurther information regarding these derivative financial instruments. Our Level 3 financial liabilities also include the estimated fair value of contingentconsideration related to completed acquisitions. Such fair values are based on discounted cash flow analyses reflecting the likelihood of achieving specifiedperformance measures or events and captures the contractual nature of the contingencies, commercial risk and the time value of money. Changes in fair valuefor contingent consideration adjustments are recorded in Other income (loss), net in the consolidated statements of operations. The largest outstandingcontingent consideration amount relates to Health Grid and was valued at $23.9 million at December 31, 2018.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, 2018 December 31, 2017 (In thousands) Classifications Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Foreign exchange derivative assets Prepaid expenses and other current assets $0 $262 $0 $262 $0 $1,136 $0 $1,136 1.25% Call Option Other assets 0 0 9,104 9,104 0 0 46,578 46,578 Total assets $0 $262 $9,104 $9,366 $0 $1,136 $46,578 $47,714 Contingent consideration Accrued expenses $0 $0 $10,528 $10,528 $0 $0 $1,950 $1,950 Contingent consideration Other liabilities 0 0 15,317 15,317 0 0 5,086 5,086 1.25% Embedded cash conversion option Other liabilities 0 0 9,974 9,974 0 0 47,777 47,777 Total liabilities $0 $0 $35,819 $35,819 $0 $0 $54,813 $54,813 The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2018 are summarized as follows: (In thousands) Contingent Consideration 1.25% Notes Call SpreadOverlay Balance at December 31, 2016 $5,285 $(579) Additions 1,923 0 Payments (171) 0 Fair value adjustments (1) (620)Balance at December 31, 2017 7,036 (1,199) Additions 24,551 0 Payments (6,067) 0 Fair value adjustments 325 329 Balance at December 31, 2018 $25,845 $(870) 84 5. Fixed AssetsFixed assets consist of the following: Estimated December 31, December 31, (Dollar amounts in thousands) Useful Life 2018 2017 Computer equipment and software 3 to 10 years $332,826 $316,537 Facility furniture, fixtures and equipment 5 to 7 years 21,300 23,923 Leasehold improvements Shorter of 7 years or life of lease 37,555 33,031 Assets under capital leases 3 to 5 years 9,435 7,203 Fixed assets, gross 401,116 380,694 Less: Accumulated depreciation and amortization (279,203) (245,277)Fixed assets, net $121,913 $135,417 Accumulated amortization for assets under capital leases amounted to $7.3 million and $5.8 million as of December 31, 2018 and 2017, respectively.Fixed assets depreciation and amortization expense were as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Fixed assets depreciation and amortization expense, including capital leases $47,567 $40,717 $34,314 6. Goodwill and Intangible AssetsGoodwill and intangible assets consist of the following: December 31, 2018 December 31, 2017 Gross Gross Carrying Accumulated Intangible Carrying Accumulated Intangible (In thousands) Amount Amortization Assets, Net Amount Amortization Assets, Net Intangibles subject to amortization: Proprietary technology $537,834 $(401,093) $136,741 $533,044 $(365,828) $167,216 Customer contracts and relationships 704,808 (462,468) 242,340 654,849 (438,492) 216,357 Total $1,242,642 $(863,561) $379,081 $1,187,893 $(804,320) $383,573 Intangibles not subject to amortization: Registered trademarks $52,000 $52,000 Goodwill 1,373,744 1,292,747 Total $1,425,744 $1,344,747During 2018, we made several organizational changes that affected our Clinical and Financial Solutions and Population Health reportable segments.Effective January 1, 2018, the dbMotion business unit, formerly included in the Population Health operating segment within the Population Healthreportable segment, is now aligned with the Hospitals and Health Systems operating segment within the Clinical and Financial solutions reportablesegment. Effective July 1, 2018, we transferred the Payerpath business, previously included in the Payer and Life Sciences operating segment, to theAmbulatory operating segment, both of which are included within our Clinical and Financial Solutions reportable segment. Effective October 1, 2018, wemerged the remaining businesses of the EIS-EWS operating segment with the EIS-Classics operating segment and also merged the NantHealth operatingsegment with the Hospitals and Health Systems operating segment. The EIS-EWS and NantHealth operating segments were previously included in thePopulation Health reportable segment, while the EIS-Classics and Hospitals and Health Systems operating segments are included within the Clinical andFinancial Solutions reportable segment. Refer to Note 17, “Business Segments,” for additional information about these organizational changes.During 2018, as a result of these organizational changes, we performed interim goodwill impairment tests as of January 1, 2018 and July 1, 2018.While there was no impairment indicated as a result of both these interim tests, the estimated fair value of our Hospitals and Health Systems reporting unitexceeded the unit’s carrying value by 10%. The fair values of all other reporting units substantially exceeded their carrying values. As of January 1, 2018, thegoodwill allocated to the Hospitals and Health Systems reporting unit was $511.2 million. 85 We performed our annual goodwill impairment test as of October 1, 2018. As a result of this test, we concluded that the carrying value of theNantHealth reporting unit exceeded its fair value. Our latest available financial forecasts at the time of the annual goodwill impairment test reflected thatprojected future operating costs exceeded projected revenues resulting in negative operating margins for the NantHealth reporting unit. As a result, werecognized a goodwill impairment charge of $13.5 million, representing the entire goodwill balance assigned to the NantHealth reporting unit. This goodwillimpairment charge is reflected on the “Goodwill impairment charge” line in our consolidated statements of operations for the year ended December 31, 2018.In addition, the results of the annual goodwill impairment test indicated that the estimated fair value of our Hospitals and Health Systems reporting unitexceeded the unit’s carrying value by less than 10%. The fair values of all other reporting units substantially exceeded their carrying values. As of October 1,2018, the goodwill allocated to the Hospitals and Health Systems reporting unit was $516.8 million.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.During 2018, we also recognized an intangible asset impairment charge of $2.2 million relating to NantHealth’s acquired proprietary technologybecause the carrying value of this definite-lived intangible assets no longer appeared recoverable based on latest available financial forecasts at the time ofthe annual goodwill impairment test. This impairment charge is included in the “Asset impairment charges” line in our consolidated statements of operationsfor the year ended December 31, 2018. 86 Accumulated impairment losses associated with goodwill totaled $13.5 million as of December 31, 2018. There were no accumulated impairmentlosses associated with our goodwill as of December 31, 2017, and no impairments were recorded during the years ended December 31, 2017 and2016. Changes in the carrying amounts of goodwill by reportable segment for the years ended December 31, 2018 and 2017 were as follows: Clinical and Population (In thousands) Financial Solutions Health Total Balance as of December 31, 2016 $843,837 $404,875 $1,248,712 Additions arising from business acquisitions: NantHealth provider/patient solutions business 0 13,350 13,350 Enterprise Information Solutions business 16,367 12,860 29,227 Other additions 420 47 467 Total additions to goodwill 16,787 26,257 43,044 Foreign exchange translation 991 0 991 Balance as of December 31, 2017 $861,615 $431,132 $1,292,747 Additions arising from business acquisitions: Practice Fusion 35,092 0 35,092 Health Grid 0 53,953 53,953 Other additions 6,399 0 6,399 Total arising from business acquisitions 41,491 53,953 95,444 Increases due to measurement period adjustments related to prior year acquisitions: NantHealth provider/patient solutions business 0 116 116 Enterprise Information Solutions business 25,192 6,857 32,049 Total increases due to measurement period adjustments: 25,192 6,973 32,165 Total additions to goodwill 66,683 60,926 127,609 Divestitures 0 (32,306) (32,306)Goodwill impairment charge 0 (13,466) (13,466)Transfers 2,904 (2,904) 0 Foreign exchange translation (840) 0 (840)Balance as of December 31, 2018 $930,362 $443,382 $1,373,744 Other additions of $6.4 million during 2018 primarily resulted from the acquisition of a cloud-based analytics software platform provider. Goodwillwas reduced by $2.2 million due to the divestiture of our Strategic Sourcing business unit and by $30.1 million related to the OneContent divestiture. Referto Note 3, “Business Combinations and Other Investments” for additional information regarding these transactions. The $2.9 million transfer was the result ofmoving the EIS-EWS operating segment from the Population Health reportable segment to the Clinical and Financial Solutions reportable segment.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) 2018 2017 2016 Proprietary technology amortization included in cost of revenue $38,467 $33,137 $30,451 Intangible amortization included in operating expenses 26,587 17,345 15,884 Total intangible amortization expense $65,054 $50,482 $46,335The increase in amortization expense since the year ended December 31, 2016 was due to acquisitions completed during the years ended December31, 2018 and 2017. Estimated future amortization expense for the intangible assets that exist as of December 31, 2018, based on foreign currency exchangerates in effect as of such date, is as follows: 87 Year Ended December 31, (In thousands) 2019 $63,010 2020 58,356 2021 52,928 2022 46,472 2023 30,272 Thereafter 128,043 Total $379,081 7. Asset Impairment ChargesDuring the year ended December 31, 2018, we incurred several non-cash asset impairment charges as shown in the table below. We recorded non-cashasset impairment charges of $33.2 million related to the write-off of capitalized software as a result of our decision to discontinue several softwaredevelopment projects. We also recorded $22.9 million of non-cash asset impairment charges related to our acquisition of the patient/provider engagementsolutions business from NantHealth in 2017, which included the write-downs of $2.2 million of acquired technology and $20.7 million, representing theunamortized value assigned to the modification of our existing commercial agreement with NantHealth, as we no longer expect to recover the value assignedto these assets. The remaining $2.1 million of non-cash asset impairment charges recorded during the year ended December 31, 2018 relate to the disposal offixed assets as a result of relocating and consolidating business functions and locations from recent acquisitions.During the year ended December 31, 2018, we impaired all of the goodwill previously recognized as part of the acquisition of NantHealth’sprovider/patient engagement solutions business following the completion of our annual goodwill impairment test. As a result, we recorded a goodwillimpairment charge of $13.5 million. Refer to Note 6, “Goodwill and Intangible Assets” for further information regarding this impairment. Finally, werecognized non-cash impairment charges of $15.5 million related to two of our cost-method equity investments and a related note receivable. These chargesequaled the cost bases of the investments and the related note receivable prior to the impairment.During the year ended December 31, 2017, we recorded 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 3, “BusinessCombinations and Other Investments” and Note 13, “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.The following table summarizes the non-cash asset impairment charges recorded during the periods indicated and where they appear in thecorresponding consolidated statements of operations: Year Ended December 31, (In thousands) 2018 2017 2016 Asset impairment charges $58,166 $0 $4,650 Goodwill impairment charge $13,466 $0 $0 Impairment of long-term investments $15,487 $165,290 $0 88 8. DebtDebt outstanding, excluding capital lease obligations, consisted of the following: December 31, 2018 December 31, 2017 (In thousands) PrincipalBalance UnamortizedDiscount andDebt IssuanceCosts Net CarryingAmount PrincipalBalance UnamortizedDiscount andDebt IssuanceCosts Net CarryingAmount 1.25% Cash Convertible Senior Notes $345,000 $22,112 $322,888 $345,000 $35,978 $309,022 Senior Secured Credit Facility 350,000 6,038 343,962 628,750 3,360 625,390 Other debt 748 0 748 0 0 0 Total debt $695,748 $28,150 $667,598 $973,750 $39,338 $934,412 Less: Debt payable within one year 20,538 479 20,059 28,125 438 27,687 Total long-term debt, less current maturities $675,210 $27,671 $647,539 $945,625 $38,900 $906,725 Interest expense consisted of the following: Year Ended December 31, (In thousands) 2018 2017 2016 Interest expense $35,366 $23,001 $15,556 Amortization of discounts and debt issuance costs 15,548 14,539 13,922 Total interest expense $50,914 $37,540 $29,478 Interest expense related to the 1.25% Cash Convertible Senior Notes, which is included in total interest expense above, was comprised of thefollowing: Year Ended December 31, (In thousands) 2018 2017 2016 Coupon interest at 1.25% $4,312 $4,312 $4,312 Amortization of discounts and debt issuance costs 13,867 13,208 12,585 Total interest expense related to the 1.25% Notes $18,179 $17,520 $16,897 Allscripts Senior Secured Credit FacilityOn 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 “Prior Credit Agreement”). The Second Amended Credit Agreement provides for a $400 million senior secured term loan (an increasefrom the $250 million term loan provided under the Prior Credit Agreement) (the “Term Loan”) and a $900 million senior secured revolving facility (anincrease from the $550 million revolving facility provided under the Prior Credit Agreement) (the “Revolving Facility”), each with a five-year term (andtogether the “Senior Secured Credit Facility”) . The Term Loan is repayable in quarterly installments, which commenced on June 30, 2018. A total of up to$50 million of the Revolving Facility is available for the issuance of letters of credit, up to $10 million of the Revolving Facility is available for swinglineloans, and up to $100 million of the Revolving Facility could be borrowed under certain foreign currencies. Proceeds from the borrowings under the SecondAmended Credit Agreement were used to refinance debt outstanding under the Prior Credit Agreement.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 Prior Credit Agreement). 89 The initial applicable interest rate margin for Base Rate borrowings is 1.00%, and for Eurocurrency Rate borrowings is 2.00%. On and after December31, 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 Prior 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 Prior 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 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 Senior Secured Credit Facility,any swap agreements and any cash management arrangements provided by any lender, remain secured, subject to permitted liens and other agreed uponexceptions, 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 the capital stock of first tiermaterial foreign subsidiaries) of Allscripts Healthcare Solutions, Inc. and certain of our subsidiary guarantors.The Senior Secured Credit Facility requires us to maintain a minimum interest coverage ratio of 3.5 to 1.0 and a maximum total net leverage ratio of4.25 to 1.0. The minimum interest coverage ratio is calculated by dividing earnings before interest expense, income tax expense, depreciation andamortization expense by cash interest expense, subject to various agreed upon adjustments. The total net leverage ratio is calculated by dividing totalindebtedness reduced by a portion of domestic unrestricted cash, by earnings before interest expense, income tax expense, depreciation and amortizationexpense, subject to various agreed upon adjustments. The Second Amended Credit Agreement also provides that during the four-quarter period followingpermitted acquisitions that are financed in whole or in part with indebtedness and the consideration paid by us is $100 million or more, we are required tomaintain a maximum total leverage ratio of 4.5 to 1.0. In addition, the Second Amended Credit Agreement requires mandatory prepayments of the debtoutstanding 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 dividends or 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. As of December 31, 2018, $350 million under the Term Loan, none under the Revolving Facility, and $0.8 million in letters of credit were outstandingunder the Second Amended Credit Agreement.As of December 31, 2018, the interest rate on the Senior Secured Credit Facility was LIBOR plus 2.00%, which totaled 4.52%. We were in compliancewith all financial covenants under the Second Amended Credit Agreement as of December 31, 2018.As of December 31, 2018, we had $899.2 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.Allscripts 1.25% 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 1st and July 1st of each year, at a fixed annual rate of 1.25%. The 1.25%Notes will mature on July 1, 2020 unless repurchased or converted in accordance with their terms prior to such date. 90 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 14, “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, 2018, we expect the 1.25% Notes tobe outstanding until their July 1, 2020 maturity date, for a remaining amortization period of approximately one and a half years. As of December 31, 2018,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 were allocated to the 1.25% Notes, the1.25% 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, was capitalizedand is being amortized over the expected term of the 1.25% Notes. The outstanding capitalized amount of transaction costs related to the 1.25% Notes was$1.8 million and is reported as a reduction of long-term debt on our consolidated balance sheet as of December 31, 2018.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, 2018. 91 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 from the initial proceeds 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 Spread Overlay. The 1.25%Call Option is a derivative financial instrument and is discussed further in Note 14, “Derivative Financial Instruments.” The 1.25% Warrants are equityinstruments and are further discussed in Note 11, “Stockholders’ Equity.” The following table summarizes future debt payments as of December 31, 2018:(In thousands) Total 2019 2020 2021 2022 2023 Thereafter 1.25% Cash Convertible Senior Notes (1) $345,000 $0 $345,000 $0 $0 $0 $0 Term Loan 350,000 20,000 27,500 30,000 37,500 235,000 0 Other debt 748 538 210 0 0 0 0 Total debt $695,748 $20,538 $372,710 $30,000 $37,500 $235,000 $0 (1)Assumes no cash conversions of the 1.25% Notes prior to their maturity on July 1, 2020. 9. Income TaxesThe following is a geographic breakdown of income (loss) before income tax benefits: Year Ended December 31, (In thousands) 2018 2017 2016 United States $14,045 $(190,053) $33,027 Foreign (907) 16 (1,467)Income (loss) from continuing operations before income taxes $13,138 $(190,037) $31,560 The following is a summary of the components of the provision (benefit) for income taxes: Year Ended December 31, (In thousands) 2018 2017 2016 Current tax provision Federal $838 $407 $372 State 737 1,796 625 Foreign 5,015 5,091 3,857 6,590 7,294 4,854 Deferred tax provision Federal (5,781) 2,800 (3,784)State 236 (12,695) 116 Foreign (576) (2,913) (877) (6,121) (12,808) (4,545)Income tax (benefit) provision $469 $(5,514) $309 92 Taxes computed at the statutory federal income tax rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31,2017 and 2016 are reconciled to the provision for income taxes as follows: Year Ended December 31, (In thousands) 2018 2017 2016 United States federal tax at statutory rate $2,759 $(66,523) $10,869 Items affecting federal income tax rate Non-deductible acquisition and reorganization expenses 291 0 1,400 Research credits (6,185) (3,200) (2,700)Change in unrecognized tax benefits 3 395 (692)State income taxes, net of federal benefit 715 (7,121) 1,931 Compensation 3,213 2,950 651 Meals and entertainment 616 991 1,085 Impact of foreign operations 3,627 730 2,847 Provision-to-Return adjustments (2,140) (1,413) (1,116)Deemed Dividends 373 1,289 887 Dividends Accrued or Received 0 0 2,198 Federal, state and local rate changes 0 185 344 US Tax reform impact 0 10,189 0 One time Mandatory Repatriation Toll Charge 0 5,155 0 Non-deductible items 34 33 51 Noncontrolling interest 951 0 0 True-up of prior year income of Consolidated Investment 913 0 0 Valuation allowance (5,208) 47,959 (17,504)Other 507 2,867 58 Income tax provision (benefit) $469 $(5,514) $309 Significant components of our deferred tax assets and liabilities consist of the following: December 31, (In thousands) 2018 2017 Deferred tax assets Accruals and reserves, net $31,565 $23,658 Allowance for doubtful accounts 11,378 6,014 Stock-based compensation, net 10,595 10,442 Deferred revenue 8,160 11,502 Net operating loss carryforwards 36,649 41,428 Capital loss carryforwards 0 42,702 Research and development tax credit 899 32,907 AMT credits 0 7,538 Other 10,784 11,108 Less: Valuation Allowance (18,734) (79,594)Total deferred tax assets 91,296 107,705 Deferred tax liabilities Prepaid expense (6,733) (6,166)Property and equipment, net (7,442) (8,464)Acquired intangibles, net (129,879) (111,112)Other (676) (647)Total deferred tax liabilities (144,730) (126,389)Net deferred tax liabilities $(53,434) $(18,684) 93 The deferred tax assets (liabilities) are classified in the consolidated balance sheets as follows: December 31, (In thousands) 2018 2017 Non-current deferred tax assets, net $5,036 $4,574 Non-current deferred tax liabilities, net (58,470) (23,258) Non-current deferred tax liabilities, net $(53,434) $(18,684) The 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 reduced 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 expense of $15.3 million in our financial statements for the year ended December 31, 2017 in accordance with guidance inStaff Accounting Bulletin No. 118 (“SAB 118”), which allows a measurement period of up to one year after the enactment date to finalize the recording of therelated tax impacts. This provisional expense included $10.1 million expense for the remeasurement of deferred tax balances to reflect the lower federal rateand expense of $5.2 million for the one-time transition tax on accumulated foreign subsidiary earnings not previously subject to income tax in the UnitedStates. Adjustments to these provisional amounts that we recorded in 2018 did not have a significant impact on our consolidated financial statements. Ouraccounting for the effects of the enactment of U.S. Tax Reform is now complete. Due to our divestiture of our investment in Netsmart, the amounts notedabove do not include the provisional amounts recorded by Netsmart in 2017.As of December 31, 2018 and 2017, we had federal net operating loss (“NOL”) carryforwards of $164 million and $179 million, respectively. Thefederal NOL carryforward includes Israeli NOL carryovers of $49 million that do not expire. As of December 31, 2018 and 2017, we had state NOLcarryforwards of $2 million and $4 million, respectively. The NOL carryforwards expire in various amounts starting in 2019 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.For federal purposes, 2015 to 2018 tax years remain subject to income tax examination by federal authorities. For our state tax jurisdictions, 2007 to2018 tax years remain open to income tax examination by state tax authorities. In Canada, the 2018 tax year remain open and in India the 2013 and 2018 taxyears 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. This tax holiday for thesubsidiary began to partially expire in 2012 and fully expired in 2017. Tax savings realized from this holiday totaled $0.4 million and $0.7 million for theyears ended December 31, 2017 and 2016, respectively, which reduced our loss per share by less than $0.01 in each of those years. There is a potential for apartial tax holiday for 5 years beginning on April 1, 2017, which is contingent upon a certain level of capital expenditure spending, among other conditions.Tax savings impact of $0.5 million has been recorded for this potential tax holiday for the year ended December 31, 2018, which impacted our dilutedearnings per share by less than $0.01 in this year.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: Year Ended December 31, (In thousands) 2018 2017 2016 Beginning balance as of January 1 $10,939 $10,616 $11,777 Increases for tax positions related to the current year 8,977 640 570 Decreases for tax positions related to prior years 0 (146) 0 Increases for tax positions related to prior years 367 153 104 Increases acquired in business acquisitions 540 0 0 Foreign currency translation (5) 10 (1)Reductions due to lapsed statute of limitations (997) (334) (1,834)Ending balance as of December 31 $19,821 $10,939 $10,616 94 We had gross unrecognized tax benefits of $19.8 million and $10.9 million as of December 31, 2018 and 2017, respectively. The main driver of theincrease in the unrecognized tax benefits as of December 31, 2018 is $7.7 million related to the uncertain positions taken on the state tax treatment of theNetsmart gain. If the current gross unrecognized tax benefits were recognized, the result would be an increase in our income tax benefit of $19.6 million and$0.1 million, respectively. These amounts are net of accrued interest and penalties relating to unrecognized tax benefits of $0.2 million and $0.7 million,respectively. We believe that it is reasonably possible that $1.8 million of our currently remaining unrecognized tax benefits may be recognized by the endof 2018, as a result of a lapse of the applicable 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) 2018 2017 2016 Interest and penalties included in the provision for income taxes $543 $446 $6 The amount of interest and penalties included in our consolidated balance sheets is as follows: December 31, (In thousands) 2018 2017 Interest and penalties included in the liability for uncertain tax positions $198 $741 During the year ended December 31, 2018, we released valuation allowance of $42.7 million related to federal capital loss carryforwards utilized bycapital gains incurred in 2018 and $22.1 million related to federal credit carryforwards. Of this total release of valuation allowance of $64.8 million, $55.3million was allocated to the Netsmart gain recorded in discontinued operations. In addition, we recorded valuation allowance of $4.7 million related to theunvested stock compensation of covered officers due to the potential deduction limitations under Section 162(m) provisions. During the year endedDecember 31, 2017, we recorded valuation allowance of $42.7 million related to federal capital loss carryforwards not expected to be realized beforeexpiration. In addition, we recorded valuation allowance of $5.3 million related to federal credit carryforwards, and foreign and state NOL carryforwards. Inevaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negativeevidence, including scheduled reversals of deferred tax liabilities, tax-planning strategies, and results of recent operations. In evaluating the objectiveevidence that historical results provide, we consider three years of cumulative operating income (loss). Using all available evidence, we determined that itwas uncertain that we will realize the deferred tax asset for certain of these carryforwards within the carryforward period.Our effective rate was higher for the year ended December 31, 2018 as compared with the prior year, primarily due to stricter executive compensationrules offset by lower US federal rates. We file income tax returns in the United States federal jurisdiction, numerous states in the United States and multiplecountries outside of the United States. We are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. A changein the assessment of the outcomes of such matters could materially impact our consolidated financial statements.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 2019earnings at the discretion of management. As of December 31, 2018, we have no other plans to repatriate any other funds at this time. A Netherlands holdingcompany currently holds all of our foreign subsidiaries. Our holding company makes it more efficient for us to share resources between the respective foreignsubsidiaries. As we have determined that the earnings of these subsidiaries are not required as a source of funding for our United States operations, suchearnings are not planned to be distributed to the United States in the foreseeable future. 95 10. Stock Award PlanTotal recognized stock-based compensation expense is included in our consolidated statements of operations as shown in the table below. Stock-based compensation expense includes both non-cash expense related to grants of stock-based awards as well as cash expense related to the employeediscount applied to purchases of our common stock under our employee stock purchase plan. Year Ended December 31, (In thousands) 2018 2017 2016 Cost of revenue: Software delivery, support and maintenance $2,184 $2,879 $4,125 Client services 3,997 4,484 4,363 Total cost of revenue 6,181 7,363 8,488 Selling, general and administrative expenses 24,213 23,497 21,829 Research and development 8,937 8,605 8,029 Total stock-based compensation expense $39,331 $39,465 $38,346The estimated income tax benefit of stock-based compensation expense included in the provision for income taxes for the year ended December 31,2018 is approximately $4.9 million. No stock-based compensation costs were capitalized during the years ended December 31, 2018, 2017 and 2016. 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, 2018, total unrecognized stock-based compensation expense relatedto non-vested awards and options was $61.3 million and this expense is expected to be recognized over a weighted-average period of 2.4 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, 2018, there were 4.9 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, 2018, there was $50.9 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, 2018, there was $1.2 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 1.0 years. 96 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 determines the number of awards that will 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 will vest, reduced by the number of awards previously vested. Stock-based compensation expense related to these awards isrecognized over the three-year vesting periods under the accelerated attribution method.As of December 31, 2018, there was $9.2 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 UnitsThe 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, 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 Awarded 4,024 13.25 Vested (2,222) 13.03 Forfeited (1,111) 12.43 Unvested restricted stock units as of December 31, 2018 7,950 $12.81 Net Share-settlementsUpon vesting, restricted stock units 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, 2018,2017 and 2016 were net-share settled such that we withheld shares with value equivalent to the employees’ minimum statutory tax obligations for theapplicable income and other employment taxes and remitted the equivalent amount of cash to the appropriate taxing authorities. Total payments for theemployees’ minimum statutory tax obligations are reflected as a financing activity within the accompanying consolidated statements of cash flows. The totalshares withheld during the years ended December 31, 2018, 2017 and 2016 were 695 thousand, 606 thousand and 648 thousand, respectively, and werebased on the value of the restricted stock units on their vesting date as determined by our closing stock price. These net-share settlements had the effect ofshare repurchases by us as they reduced the number of shares that would have otherwise been issued at the vesting date. 97 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, 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 13.85 Options granted 0 0.00 Options exercised (92) 14.01 Options forfeited (211) 14.74 Balance as of December 31, 2018 1,332 $13.69 1,332 $13.69We 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, 2018 was zero, based on our closing stock price of $9.64as of December 31, 2018. The intrinsic value of stock options outstanding represents the amount that would have been received by the option holders had alloption holders exercised their stock options as of that date.The following activity occurred under the Plan: Year Ended December 31, (In thousands) 2018 2017 2016 Total intrinsic value of stock options exercised $69 $45 $1 Total fair value of share awards vested $28,954 $25,220 $26,892 The following table summarizes information about stock options outstanding under the Plan as of December 31, 2018: 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 1,323,447 $13.69 1,323,447 $13.69 $14.78 to $15.22 8,239 $14.81 8,239 $14.81 1,331,686 1,331,686 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 1.6 million and 1.0 million shares purchased under the ESPP duringthe years ended December 31, 2018 and 2017, respectively. 98 11. Stockholders’ EquityStock RepurchasesOn November 17, 2016, we announced that our Board approved a stock purchase program (the “2016 Program”) under which we may repurchase up to$200 million of our common stock through December 31, 2019. On August 2, 2018, we announced that our Board approved a new stock purchase program(the “2018 Program”) under which we may repurchase up to $250 million of our common stock through December 31, 2020, replacing the 2016 Program. Werepurchased 3.6 million shares of our common stock under the 2018 Program for a total $37.0 million during the fourth quarter of 2018. We repurchased 7.7million shares of our common stock under the 2016 Program for a total of $101.9 million during the nine months ended September 30, 2018. During the yearended December 31, 2017, we repurchased 1.0 million shares of our common stock under the 2016 Program for a total of $12.1 million. Any future stockrepurchase transactions may be made through open market transactions, block trades, privately negotiated transactions (including accelerated sharerepurchase transactions) or other means, subject to our working capital needs, cash requirements for investments, debt repayment obligations, economic andmarket conditions at the time, including the price of our common stock, and other factors that we consider relevant. Our stock repurchase program may beaccelerated, suspended, delayed or discontinued at any time.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 our common stock at a price per share of $14.34and (iii) 1,100,000 shares of our common stock at a price per share of $15.59, in each case subject to customary anti-dilution adjustments. The warrants vestin four equal annual installments of 750 thousand shares beginning in June 2017 and expire in June 2026. Our issuance of the warrants was a privateplacement exempt from registration pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended. These warrants are not actively traded and werevalued based on an option pricing model that uses observable and unobservable market data for inputs. The warrants were valued at $11 million and arebeing amortized into earnings over the four-year vesting period. The amortization expense is included as a reduction to revenue in the accompanyingconsolidated statements of operations.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, 2018 and 2017. 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 was amortized into earnings over the four-year vesting period. The amortization of the warrant value is included in stock-based compensation expense in the accompanying consolidated statements ofcash flows. 99 12. 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) 2018 2017 2016 Basic Income (Loss) per Common Share: Income (loss) from continuing operations, net of tax $12,669 $(184,523) $31,251 Less: Net loss (income) attributable to non-controlling interests 4,527 1,566 (146)Net income (loss) from continuing operations attributable to Allscripts Healthcare Solutions, Inc. stockholders $17,196 $(182,957) $31,105 Income (loss) from discontinued operations, net of tax 395,138 30,348 (28,221)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations (48,594) (43,850) (28,536)Net income (loss) from discontinued operations attributable to Allscripts Healthcare Solutions, Inc. stockholders 346,544 (13,502) (56,757)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $363,740 $(196,459) $(25,652) Weighted-average common shares outstanding 176,038 180,830 186,188 Basic Income (Loss) from continuing operations per Common Share $0.10 $(1.02) $0.17 Basic Income (Loss) from discontinued operations per Common Share $1.97 $(0.07) $(0.31)Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders per Common Share $2.07 $(1.09) $(0.14) Diluted Income (Loss) per Common Share: Income (loss) from continuing operations, net of tax $12,669 $(184,523) $31,251 Less: Net loss (income) attributable to non-controlling interests 4,527 1,566 (146)Net income (loss) from continuing operations attributable to Allscripts Healthcare Solutions, Inc. stockholders $17,196 $(182,957) $31,105 Income (loss) from discontinued operations, net of tax $395,138 $30,348 $(28,221)Less: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations (48,594) (43,850) (28,536)Net income (loss) from discontinued operations attributable to Allscripts Healthcare Solutions, Inc. stockholders 346,544 (13,502) (56,757)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $363,740 $(196,459) $(25,652) Weighted-average common shares outstanding 176,038 180,830 186,188 Dilutive effect of stock options, restricted stock unit awards and warrants 2,491 0 0 Weighted-average common shares outstanding assuming dilution 178,529 180,830 186,188 Diluted Income (Loss) from continuing operations per Common Share $0.10 $(1.02) $0.17 Diluted Income (Loss) from discontinued operations per Common Share $1.94 $(0.07) $(0.31)Net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders per Common Share $2.04 $(1.09) $(0.14) 100 As a result of the net loss attributable to Allscripts Healthcare Solutions, Inc. stockholders for the years ended December 31, 2017 and 2016, we usedbasic 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.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) 2018 2017 2016 Shares subject to anti-dilutive stock options, restricted stock unit awards and warrants excluded from calculation 26,175 26,515 25,277 13. 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) Foreign CurrencyTranslationAdjustments Unrealized NetGains (Losses) onAvailable forSale Securities Unrealized Net Gains(Losses) on ForeignExchange Contracts Total Balance as of December 31, 2015 (1) $(4,500) $0 $258 $(4,242)Other comprehensive (loss) income before reclassifications (1,528) (56,420) 683 (57,265)Net losses (gains) reclassified from accumulated other comprehensive loss 0 0 (322) (322)Net other comprehensive (loss) income (1,528) (56,420) 361 (57,587)Balance as of December 31, 2016 (2) (6,028) (56,420) 619 (61,829)Other comprehensive (loss) income before reclassifications 3,352 (106,445) 1,697 (101,396)Net losses (gains) reclassified from accumulated other comprehensive loss 0 162,865 (1,625) 161,240 Net other comprehensive (loss) income 3,352 56,420 72 59,844 Balance as of December 31, 2017 (3) (2,676) 0 691 (1,985)Other comprehensive (loss) income before reclassifications (2,908) 0 (264) (3,172)Net losses (gains) reclassified from accumulated other comprehensive loss 0 0 (232) (232)Net other comprehensive (loss) income (2,908) 0 (496) (3,404)Balance as of December 31, 2018 (4) $(5,584) $0 $195 $(5,389)(1) Net of taxes of $166 thousand for unrealized net gains on marketable securities and foreign exchange contract derivatives(2) Net of taxes of $463 thousand for unrealized net gains on marketable securities and foreign exchange contract derivatives(3) Net of taxes of $445 thousand for unrealized net gains on foreign exchange contract derivatives(4) Tax effects for the year ended December 31, 2018 include $149 thousand arising from the revaluations of tax effects included in accumulated other comprehensive income.Income 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, 2018 (In thousands) Before-TaxAmount Tax Effect Net Amount Foreign currency translation adjustments $(2,908) $0 $(2,908)Derivatives qualifying as cash flow hedges: Foreign exchange contracts: Net (losses) gains arising during the period (357) 93 (264)Net (gains) losses reclassified into income (1) (516) 284 (232)Net change in unrealized (losses) gains on foreign exchange contracts (873) 377 (496)Net gain (loss) on cash flow hedges (873) 377 (496)Other comprehensive loss $(3,781) $377 $(3,404)(1) Net of taxes of $68 thousand for unrealized net gains on foreign exchange contract derivatives 101 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) 14. 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, 2018 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 $262 Accrued expenses $0 Derivatives not subject to hedge accounting: 1.25% Call Option Other assets 9,104 N/A 1.25% Embedded cash conversion option N/A Other liabilities 9,974 Total derivatives $9,366 $9,974 102 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 $47,777N/A – We define “N/A” as disclosure not being applicableForeign Exchange ContractsWe have entered into non-deliverable forward foreign currency exchange contracts with reputable banking counterparties in order to hedge a portionof our forecasted future Indian Rupee-denominated (“INR”) expenses against foreign currency fluctuations between the United States dollar and the INR.These forward contracts cover a decreasing percentage of forecasted monthly INR expenses over time. As of December 31, 2018, there were 12 forwardcontracts outstanding that were staggered to mature monthly starting in January 2019 and ending in December 2019. 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 December 2019. As ofDecember 31, 2018, the total notional amount for each of the outstanding forward contracts was 160 million INR, or the equivalent of $2.3 million, based onthe exchange rate between the United States dollar and the INR in effect as of December 31, 2018. These amounts also approximate the forecasted future INRexpenses 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 accumulated other comprehensive loss(“AOCI”) and subsequently reclassified to income in the period in which the cash flows from the associated hedged transactions affect income. Anyineffective portion of the change in fair value of the cash flow hedges is recognized in current period income. During the year ended December 31, 2018, noamount was excluded from the effectiveness assessment and no gains or losses were reclassified from AOCI into income as a result of forecasted transactionsthat failed to occur. As of December 31, 2018, we estimate that $0.3 million of net unrealized derivative gains included in AOCI will be reclassified intoincome 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 income (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) 2018 2017 2016 2018 2017 2016 Foreign exchange contracts $(357) $2,776 $1,128 Cost of Revenue $165 $905 $165 Selling, general and administrative expenses 138 692 133 Research and development 214 1,065 2331.25% 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. 103 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 this instrument is recognizedimmediately in our consolidated statements of operations in Other income (loss), net. Because the terms of the 1.25% Call Option are substantially similar tothose of 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.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 (loss), 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) 2018 2017 2016 1.25% Call Option $(37,474) $29,498 $(63,128)1.25% Embedded cash conversion option 37,803 (30,118) 63,551 Net loss included in other income, net $329 $(620) $423 15. 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) 2018 2017 2016 Rent expense $28,677 $22,499 $18,113 Our future commitments under capital and operating leases are shown below. Future operating lease commitments are calculated using the base rentalamount and foreign currency exchange rates in effect as of December 31, 2018. 104 Capital Operating (In thousands) Leases Leases 2019 $1,351 $26,330 2020 422 22,394 2021 46 18,824 2022 14 17,493 2023 0 15,582 Thereafter 0 31,658 1,833 $132,281 Less amount representing interest (69) 1,764 Current maturities of capital lease obligations 996 Capital lease obligations, net of current maturities $768 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 amended and restated agreement with Atos and, therefore, starting in 2018, we beganto transition substantially all of our hosting services to Atos. The increased scale of the relationship is expected to result in future reductions in the base feesand volume fee rates. The new amended and restated agreement extends the term to 2023 with annual auto-renewal periods for an additional two yearsthereafter. The new agreement also provides for the payment of initial annual base fees of $30 million per year (decreasing to $25 million by the end of theagreement) plus charges for volume-based services currently projected using volumes estimated based on historical actuals and forecasted projections.Expenses under our agreement with Atos, which are included in cost of revenue in our consolidated statements of operations, are as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Expenses incurred under Atos agreement $55,903 $58,787 $62,266 16. Discontinued OperationsNetsmart Discontinued OperationOn December 31, 2018, we sold all of the Class A Common Units of Netsmart held by the Company in exchange for $566.6 million in cash plus a finalsettlement as determined following the closing. Prior to the sale, Netsmart comprised a separate reportable segment, which due to its significance to ourhistorical consolidated financial statements and results of operations, is reported as a discontinued operation as a result of the sale. Refer to Note 3, “BusinessCombinations and Other Investments” for additional information about this transaction.The following table summarizes Netsmart’s major classes of assets and liabilities as reported on the consolidated balance sheets as of December 31,2017 as the balances were fully deconsolidated as of December 31, 2018: 105 (In thousands) December 31, 2017 Carrying amounts of major classes of assets associated with Netsmart included as part of assets attributable to discontinued operations: Cash and cash equivalents $31,504 Accounts receivable, net 75,313 Prepaid expenses and other current assets 9,008 Total current assets attributable to Netsmart discontinued operations 115,825 Fixed assets, net 30,186 Software development costs, net 27,344 Intangible assets, net 391,299 Goodwill 712,206 Other assets 1,998 Total noncurrent assets attributable to Netsmart discontinued operations $1,163,033 Carrying amounts of major classes of liabilities associated with Netsmart included as part of liabilities attributable to discontinued operations: Accounts payable $11,834 Accrued expenses 8,115 Accrued compensation and benefits 16,560 Deferred revenue 68,256 Current maturities of non-recourse long-term debt - Netsmart 2,755 Current maturities of capital lease obligations 6,763 Total current liabilities attributable to Netsmart 114,283 Non-recourse long-term debt - Netsmart 625,193 Long-term capital lease obligations 4,758 Deferred revenue long-term 4,838 Deferred taxes, net 70,385 Other liabilities 2,342 Total noncurrent liabilities attributable to Netsmart $707,516 Redeemable convertible non-controlling interest attributable to discontinued operations $431,535 Non-controlling interest attributable to discontinued operations $48 106 The following table summarizes Netsmart’s major income and expense line items as reported in the consolidated statements of operations for the yearsended December 31, 2018, 2017 and 2016: Year ended December 31, (In thousands) 2018 2017 2016 Major income and expense line items related to Netsmart:(1) Revenue: Software delivery, support and maintenance $214,065 $198,204 $104,319 Client services 131,166 110,430 59,511 Total revenue 345,231 308,634 163,830 Cost of revenue: Software delivery, support and maintenance 60,100 51,079 36,823 Client services 94,061 78,317 39,851 Amortization of software development and acquisition related assets 34,357 29,876 17,416 Total cost of revenue 188,518 159,272 94,090 Gross profit 156,713 149,362 69,740 Selling, general and administrative expenses 125,807 85,583 58,344 Research and development 25,315 17,937 9,372 Amortization of intangible and acquisition-related assets 24,029 16,409 9,963 (Loss) income from discontinued operations for the Netsmart sale before income taxes (18,438) 29,433 (7,939)Interest expense (59,541) (49,939) (38,663)Other income 101 925 258 Income tax benefit 22,933 45,253 18,123 (Loss) income from discontinued operations, net of tax for Netsmart $(54,945) $25,672 $(28,221)(1)Activity includes both Netsmart and intercompany transactions that would not have been eliminated if Netsmart’s results were not consolidated.Horizon Clinicals and Series2000 Revenue Cycle Discontinued OperationTwo of the product offerings acquired with the EIS Business in 2017, Horizon Clinicals and Series2000 Revenue Cycle, were sunset after March 31,2018. The decision to discontinue maintaining and supporting these solutions was made prior to our acquisition of the EIS Business and, therefore, they arepresented below as discontinued operations. Until the end of the first quarter of 2018, we were involved in ongoing maintenance and support for thesesolutions until customers transitioned to other platforms. No disposal gains or losses were recognized during the year ended December 31, 2018 related tothese discontinued solutions.The following table summarizes the major classes of assets and liabilities of these discontinued solutions, as reported on the consolidated balancesheets as of December 31, 2018 and 2017:(In thousands) December 31, 2018 December 31, 2017 Carrying amounts of major classes of assets associated with Horizon Clinicals and Series2000 Revenue Cycle included as part of assets attributable to discontinued operations: Accounts receivable, net $0 $8,196 Prepaid expenses and other current assets 0 3,080 Total current assets attributable to discontinued operations $0 $11,276 Carrying amounts of major classes of liabilities associated with Horizon Clinicals and Series2000 Revenue Cycle included as part of liabilities attributable to discontinued operations: Accounts payable $0 $114 Accrued expenses 920 5,599 Accrued compensation and benefits 0 7,728 Deferred revenue 0 7,241 Other classes of liabilities that are not major 0 676 Total current liabilities attributable to discontinued operations $920 $21,358 107 The following table summarizes the major income and expense line items of these discontinued solutions, as reported in the consolidated statementsof operations for the years ended December 31, 2018 and 2017: Year ended December 31, 2018 (In thousands) 2018 2017 Major income and expense line items relating to the Horizon Clinicals and Series2000Revenue Cycle discontinued solutions: Revenue: Software delivery, support and maintenance $9,441 $10,949 Client services 404 1,044 Total revenue 9,845 11,993 Cost of revenue: Software delivery, support and maintenance 2,322 2,918 Client services 830 261 Total cost of revenue 3,152 3,179 Gross profit 6,693 8,814 Research and development 1,651 1,148 Income from discontinued operations for Horizon Clinicals and Series2000 Revenue Cycle before income taxes 5,042 7,666 Income tax provision (1,311) (2,990)Income from discontinued operations, net of tax for Horizon Clinicals and Series2000 Revenue Cycle $3,731 $4,676 17. 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 the first quarter of 2018, in an effort to further streamline and align our operating structure around our key acute and population healthmanagement solutions, we made several changes to our organizational and reporting structure. These changes included the split of our former PopulationHealth operating segment, which was part of our Population Health reportable segment, into several components. The dbMotion business unit, previouslyincluded in the Population Health operating segment, was aligned with the Hospitals and Health Systems operating segment within the Clinical andFinancial solutions reportable segment. The Care Management, Referral Management and Careport business units, previously included in the PopulationHealth operating segment, were combined into a new Careport operating segment within the Population Health reportable segment. In addition, the 2bPrecisebusiness became a separate operating segment. The segment disclosures below for the years ended December 31, 2017 and 2016, were have been revised toconform to the current year presentation.During the second quarter of 2018, we changed the presentation of certain research and development expenses related to common solutions andresources that benefit all of our business units. Such expenses were previously internally allocated to our business units. Under the new presentation, suchexpenses are no longer internally allocated and are included as part of “Unallocated Amounts.” The gross profit and income from operations previouslyreported for our reportable segments for the years ended December 31, 2017 and 2016 have been recast to match the new presentation. As a result, the grossprofit and income from operations of the Clinical and Financial Solutions reportable segment increased by $3 million and $38 million, respectively, for theyear ended December 31, 2017 and by $2 million and $44 million, respectively, for the year ended December 31, 2016. In addition, the gross profit andincome from operations of the Population Health reportable segment increased by nil and $1 million, respectively, for the year ended December 31, 2017 andincreased by nil and $2 million, respectively, for the year ended December 31, 2016.During the third quarter of 2018, as part of our continued efforts to improve operating efficiency and offer innovative products and services, wetransferred the Payerpath business, previously part of the Veradigm operating segment (f/k/a Payor and Life Sciences operating segment), to the Ambulatoryoperating segment. This transfer had no impact on our reportable segments since both the Ambulatory and Veradigm operating segments are included withinthe Clinical and Financial Solutions reportable segment. 108 During the fourth quarter of 2018, we further streamlined the Company’s operating segments. We merged the leadership and remaining businesses ofthe EIS-EWS operating segment with the EIS-Classics operating segment. This change was primarily driven by the sale of the Strategic Sourcing andOneContent business units earlier in 2018, which together comprised a substantial majority of the EIS-EWS operating segment. Refer to Note 3, “BusinessCombinations and Other Investments” for additional information regarding the sale of the Strategic Sourcing and OneContent business units. We also mergedthe leadership and assets of the NantHealth operating segment with the Hospitals and Health Systems operating segment. The EIS-EWS and NantHealthoperating segments were previously included in the Population Health reportable segment, while the EIS-Classics and Hospitals and Health Systemsoperating segments are included within the Clinical and Financial Solutions reportable segment. The segment disclosures below for the years endedDecember 31, 2017 and 2016, have been revised to conform to the current year presentation.Finally, on December 31, 2018, we sold all of our investment in Netsmart. Prior to the sale, Netsmart comprised a separate reportable segment, whichdue to its significance to our historical consolidated financial statements and results of operations, is reported as a discontinued operation as a result of thesale. In addition, the results of operations related to two of the product offerings acquired with the EIS Business (Horizon Clinicals and Series2000) are alsopresented throughout these financial statements as discontinued operations and are included within the Clinical and Financial Solutions reportable segment,except for acquisition-related deferred revenue adjustments, which are included in “Unallocated Amounts”. Refer to Note 16, “Discontinued Operations.”As a result of the above changes, as of December 31, 2018, we had eight operating segments, which are aggregated into two reportable segments. TheClinical and Financial Solutions reportable segment includes the Hospitals and Health Systems, Ambulatory, Veradigm, and EIS-Classics strategic businessunits, each of which represents a separate operating segment. This reportable segment derives its revenue from the sale of integrated clinical softwareapplications and financial and information solutions, which primarily include EHR-related software, connectivity and coordinated care solutions, financialand practice management software, related installation, support and maintenance, outsourcing, private cloud hosting, revenue cycle management, trainingand electronic claims administration services. The Population Health reportable segment is comprised of three separate operating segments: Careport,FollowMyHealth®, and EPSiTM. This reportable segment derives its revenue from the sale of health management, financial management and patientengagement solutions, which are mainly targeted at hospitals, health systems, other care facilities and Accountable Care Organizations (“ACOs”). The2bPrecise operating segment is included in “Unallocated Amounts” based on materiality. Our Chief Operating Decision Maker (“CODM”) uses segment revenues, gross profit and income from operations as measures of performance and tomake decisions about the allocation of resources. In determining these performance measures, we do not include in revenue the amortization of acquisition-related deferred revenue adjustments, which reflect the fair value adjustments to deferred revenue acquired in a business combination. We also exclude theamortization of intangible assets, stock-based compensation expense, non-recurring expenses and transaction-related costs, and non-cash asset impairmentcharges from the operating segment data provided to our CODM. Non-recurring expenses relate to certain severance, product consolidation, legal, consultingand other charges incurred in connection with activities that are considered one-time. Accordingly, these amounts are not included in our reportable segmentresults and are included in an “Unallocated Amounts” category within our segment disclosure. The “Unallocated Amounts” category also includes (i)corporate general and administrative expenses (including marketing expenses) and certain research and development expenses related to common solutionsand resources that benefit all of our business units (refer to discussion above), all of which are centrally managed, (ii) revenue and the associated cost from theresale of certain ancillary products, primarily hardware and (iii) the results of the 2bPrecise operating segment. We do not track our assets by segment. 109 Year Ended December 31, (In thousands) 2018 2017 2016 Revenue: Clinical and Financial Solutions $1,565,987 $1,337,030 $1,183,196 Population Health 190,706 173,809 177,394 Unallocated Amounts (6,731) (13,131) 25,479 Total revenue $1,749,962 $1,497,708 $1,386,069 Gross Profit: Clinical and Financial Solutions $663,005 $574,386 $496,595 Population Health 146,614 142,514 149,338 Unallocated Amounts (85,076) (84,101) (44,634)Total gross profit $724,543 $632,799 $601,299 Income (loss) from operations: Clinical and Financial Solutions $344,568 $335,005 $287,077 Population Health 100,118 112,577 123,685 Unallocated Amounts (537,738) (435,098) (343,052)Total income (loss) from operations $(93,052) $12,484 $67,710 18. Supplemental DisclosuresThe majority of the restricted cash balance as of December 31, 2018 represents the remaining balance of the escrow account established as part of theacquisition of Netsmart in 2016 to be used by Netsmart to facilitate the integration of our HomecareTM business within Netsmart and an escrow fund relatedto a previous acquisition associated with the acquired EIS Business. December 31, (In thousands) 2018 2017 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $174,243 $119,470 Restricted cash 10,552 11,524 Total cash, cash equivalents and restricted cash $184,795 $130,994 Year Ended December 31, (In thousands) 2018 2017 2016 Cash paid during the period for: Interest $28,888 $21,183 $14,989 Income taxes paid, net of tax refunds $10,108 $6,675 $5,466 Non-cash transactions: Accretion of redemption preference on redeemable convertible non-controlling interest - discontinued operations $48,594 $43,850 $28,536 Exchange of NantHealth, Inc. common stock for net assets acquired of NantHealth provider/patient engagement solutions business including value assigned to commercial agreement $0 $42,750 $0 Obligations incurred to purchase capitalized software or enter into capital leases $1,501 $1,897 $27,127 Contribution of assets in exchange for equity interest $4,000 $0 $0 Issuance of treasury stock to commercial partner $1,121 $334 $0 Accrued expenses consist of the following: December 31, December 31, (In thousands) 2018 2017 Royalties, certain third-party product costs and licenses $26,371 $14,195 Other 79,701 63,605 Total accrued expenses $106,072 $77,800 110 Other consists of various accrued expenses and no individual item accounted for more than 5% of the current liabilities balance at the respectivebalance sheet dates.Other assets consist of the following: December 31, December 31, (In thousands) 2018 2017 Reseller agreement with Nant Health, LLC $0 $22,252 Fair value of 1.25% Call Option 9,104 46,578 Long-term deferred hosting fees 20,805 0 Long-term prepaid commissions 32,660 32,938 Investments in non-marketable securities 37,040 30,013 Long-term deposits and other assets 9,597 15,070 Total other assets $109,206 $146,851 19. 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) 2018 2017 2016 United States $1,697,178 $1,440,842 $1,336,799 Canada 15,377 15,818 18,694 Other international 37,407 41,048 30,576 Total $1,749,962 $1,497,708 $1,386,069 A summary of our long-lived assets, comprised of fixed assets by geographic area, is presented below: December 31, December 31, (In thousands) 2018 2017 United States $111,836 $129,021 India 4,231 4,154 Israel 3,830 1,322 Canada 60 146 Other international 1,956 774 Total $121,913 $135,417 20. 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. 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 is inherently uncertain, and we may incur substantial defense costs and expenses defending any of these matters. Inthe opinion of our management, the ultimate disposition of pending legal proceedings or claims will not have a material adverse effect on our consolidatedfinancial position, liquidity or results of operations. However, if one or more of these legal proceedings were resolved against us in a reporting period foramounts in excess of our management’s expectations, our consolidated financial statements for that reporting period could be materially adversely affected.Additionally, the resolution of a legal proceeding against us could prevent us from offering our products and services to current or prospective clients orcause us to incur increased compliance costs, either of which could further adversely affect our operating results. 111 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’sOffice for the Eastern District of New York. The CID requests documents and information related to the certification McKesson obtained for Horizon Clinicalsin connection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program. In August 2018, McKesson received anadditional CID seeking similar information for Paragon. McKesson has agreed, with respect to the CIDs, to indemnify Allscripts for amounts paid or payableto the government (or any private relator) involving any products or services marketed, sold or licensed by the EIS Business as of or prior to the closing of theacquisition. To date, there has been no claim or legal proceeding against Allscripts related to this investigation.Practice Fusion, acquired by Allscripts on February 13, 2018, received in March 2017 a request for documents and information from the U.S.Attorney’s Office for the District of Vermont pursuant to a CID. Between April 2018 and January 2019, Practice Fusion received five additional requests fordocuments and information through additional CIDs and Health Insurance Portability and Accountability Act subpoenas. These requests relate to thecertification Practice Fusion obtained in connection with the U.S. Department of Health and Human Services’ Electronic Health Record Incentive Program,compliance with the Anti-Kickback Statute and related business practices. Practice Fusion has produced documents in response to these requests. To date,there has been no claim or legal proceeding against Practice Fusion related to this investigation.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. Plaintiff seeks to represent a class of customers seeking damages from Allscripts. Allscripts has movedto dismiss the Plaintiff’s complaint. 112 21. Quarterly Financial Information (Unaudited)The following tables contain a summary of our unaudited quarterly consolidated results of operations for our last eight fiscal quarters, which havebeen restated to illustrate Netsmart as a discontinued operation. Quarter Ended December 31, September 30, June 30, March 31, (In thousands, except per share amounts) 2018 2018 2018 (1) 2018 (1) Revenue $442,346 $432,430 $441,464 $433,722 Cost of revenue 254,187 254,478 267,697 249,057 Gross profit 188,159 177,952 173,767 184,665 Selling, general and administrative expenses 99,992 108,125 122,913 119,937 Research and development 66,096 63,032 74,491 64,790 Asset impairment charges 28,091 0 30,075 0 Goodwill impairment charge 13,466 0 0 0 Amortization of intangible and acquisition-related assets 6,957 6,609 6,382 6,639 (Loss) income from operations (26,443) 186 (60,094) (6,701)Interest expense (13,989) (13,251) (11,979) (11,695)Other income (loss), net 658 (536) (14) (34)Gain on sale of businesses, net 0 0 173,129 (871)Impairment of and losses on long-term investments 0 0 (9,987) (5,500)Equity in net (loss) income of unconsolidated investments (270) (177) 767 (61)(Loss) income from continuing operations before income taxes (40,044) (13,778) 91,822 (24,862)Income tax benefit (provision) 5,449 1,637 (7,256) (299)(Loss) income from continuing operations, net of tax (34,595) (12,141) 84,566 (25,161)Loss from discontinued operations (39,854) (13,857) (14,109) (5,016)Gain on sale of Netsmart 500,471 0 0 0 Income tax effect on discontinued operations (40,126) 2,152 3,815 1,662 Income (loss) from discontinued operations, net of tax 420,491 (11,705) (10,294) (3,354)Net income (loss) 385,896 (23,846) 74,272 (28,515)Less: Net loss attributable to non-controlling interest 1,033 4 2,700 790 Less: Accretion redemption preference on redeemable non-controlling interest - discontinued operations (12,148) (12,149) (12,148) (12,149)Net income (loss) attributable to Allscripts Healthcare Solutions, Inc. stockholders $374,781 $(35,991) $64,824 $(39,874) Net income (loss) attributable to Allscripts Healthcare Solutions, Inc.stockholders per share: Basic Continuing operations $(0.19) $(0.07) $0.49 $(0.14)Discontinued operations $2.36 $(0.13) $(0.13) $(0.08)Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $2.17 $(0.20) $0.36 $(0.22) Diluted Continuing operations $(0.19) $(0.07) $0.49 $(0.14)Discontinued operations $2.33 $(0.13) $(0.13) $(0.08)Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $2.14 $(0.20) $0.36 $(0.22) 113 Quarter Ended December 31, September 30, June 30, March 31, (In thousands, except per share amounts) 2017 (2) 2017 (2) 2017 2017 Revenue $436,411 $368,091 $350,150 $343,056 Cost of revenue 260,208 205,843 199,930 198,928 Gross profit 176,203 162,248 150,220 144,128 Selling, general and administrative expenses 123,113 93,790 91,033 92,752 Research and development 68,344 46,485 42,205 45,248 Amortization of intangible and acquisition-related assets 6,005 3,816 3,745 3,779 Income from operations (21,259) 18,157 13,237 2,349 Interest expense (11,594) (9,251) (8,279) (8,416)Other income (loss), net 160 (685) (222) 235 Impairment of and losses on long-term investments 0 (20,700) (144,590) 0 Equity in net loss of unconsolidated investments 115 449 (28) 285 Loss from continuing operations before income taxes (32,578) (12,030) (139,882) (5,547)Income tax benefit (provision) 9,973 (3) (1,962) (1,263) (1,234)Loss from continuing operations, net of tax (22,605) (13,992) (141,145) (6,781)Income from discontinued operations, net of tax 37,468 (3,470) (1,866) (1,784)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 redemption preference on redeemable non-controlling interest - discontinued operations (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 $(0.12) $(0.08) $(0.78) $(0.04)Discontinued operations $0.15 $(0.08) $(0.07) $(0.07)Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $0.03 $(0.16) $(0.85) $(0.11) Diluted Continuing operations $(0.12) $(0.08) $(0.78) $(0.04)Discontinued operations $0.15 $(0.08) $(0.07) $(0.07)Net income (loss) attributable to Allscripts Healthcare Solutions,Inc. stockholders per share $0.03 $(0.16) $(0.85) $(0.11) (1)Results of operations for the quarter include the results of operations of (i) Practice Fusion since February 13, 2018 and (ii) Health Grid since May 18, 2018.(2)Results of operations for the quarter include the results of operations of (i) the provider/ patient engagement solutions business of NantHealth, Inc. since August 25, 2017and (ii) the EIS Business since October 2, 2017.(3)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. 114 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 were effective as of December 31, 2018 to, provide assurance at a reasonable level that the information we are required to disclose inreports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules andforms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, asappropriate, to allow for timely decisions 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, 2018 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 31,2018. We reviewed the results of management’s assessment with the Audit Committee of our Board. The effectiveness of our internal control over financialreporting as of December 31, 2018 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in its report which isincluded 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, 2018, 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.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. 115 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 1 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 2019 Proxy Statement (the “2019 Proxy Statement”) to be filed with the U.S. Securities andExchange Commission (the “SEC”) within 120 days after December 31, 2018.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 2019 Proxy Statement to be filed with the SEC within 120 days afterDecember 31, 2018.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 2019 Proxy Statement to be filed with the SEC within 120 daysafter December 31, 2018.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 2019 Proxy Statement to be filed with theSEC within 120 days after December 31, 2018.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 2019 Proxy Statement to be filed with the SEC within 120days after December 31, 2018. 116 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 55 Report of Independent Registered Public Accounting Firm 56 Consolidated Balance Sheets as of December 31, 2018 and 2017 57 Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016 59 Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016 60 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018, 2017 and 2016 61 Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 62 Notes to Consolidated Financial Statements 63 (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, 2018 $31,386 $21,156 $5,512 $(7,648) $50,406 Year ended December 31, 2017 28,655 7,384 1,482 (6,135) 31,386 Year ended December 31, 2016 31,266 6,979 661 (10,251) 28,655All 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. 117 (a)(3) Exhibits Incorporated by ReferenceExhibitNumber Exhibit Description Filed Herewith FurnishedHerewith Form Exhibit Filing Date 2.1* 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 2.2* 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 2.3* Purchase Agreement, dated as of August 1, 2017, by and betweenMcKesson Corporation and Allscripts Healthcare, LLC. 8-K 2.1 August 4, 2017 2.4 Amendment No. 1 to Purchase Agreement, dated as of October 2,2017, by and between McKesson Corporation and AllscriptsHealthcare, LLC. 10-Q 2.3 November 9,2017 2.5* Asset Purchase Agreement, dated as of August 3, 2017, betweenAllscripts Healthcare Solutions, Inc. and NantHealth, Inc. 8-K 2.1 August 31, 2017 2.6* Asset Purchase Agreement, dated as of February 15, 2018, by andamong Hyland Software, Inc., Allscripts Healthcare, LLC, PF2 EISLLC, Allscripts Software, LLC and Allscripts Healthcare Solutions,Inc. 8-K 2.1 February 16,2018 2.7* Agreement and Plan of Merger, dated as of January 5, 2018, by andamong Allscripts Healthcare, LLC, Presidio Sub, Inc., Practice Fusion,Inc. and Fortis Advisors LLC, as representative of the Holders 10-Q 2.2 May 8, 2018 2.8* Agreement and Plan of Merger, dated as of April 27, 2018, by andamong Allscripts Healthcare, LLC, FollowMyHealth Merger Sub, Inc.,Health Grid Holding Company, the persons listed on the schedulesthereto and Raj Toleti in his capacity as the representative of theStockholders 10-Q 2.2 August 6, 2018 2.9* Unit Purchase Agreement, dated as of December 7, 2018, by andamong Allscripts Healthcare, LLC, Allscripts Next, LLC, AllscriptsHealthcare Solutions, Inc. and the Purchasers named in the schedulesthereto. 8-K 2.1 December 11,2018 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, asTrustee 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 Second Amended and Restated Credit Agreement, dated as ofFebruary 15, 2018, by and among Allscripts Healthcare Solutions,Inc., Allscripts Healthcare, LLC, the lenders from time to time partiesthereto, JPMorgan Chase Bank, N.A., as Administrative Agent, andFifth Third Bank, KeyBank National Association, SunTrust Bank, andWells Fargo Bank, National Association, as Syndication Agents 8-K 10.1 February15, 2018 118 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.2 Guarantee and Collateral Agreement, dated as of June 28, 2013, by andamong Allscripts Healthcare Solutions, Inc., Allscripts Healthcare, LLC andcertain other subsidiaries party thereto, and JPMorgan Chase Bank, N.A., asadministrative agent 8-K 10.2 July 2, 2013 10.3 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 10.4 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 10.5 Convertible note hedge transaction confirmation, dated as of June 12,2013, by and between Citibank, N.A. and Allscripts Healthcare Solutions,Inc. 8-K 10.3 June 18, 2013 10.6 Amendment to convertible note hedge transaction, dated as of June 14,2013, by and between Citibank, N.A., and Allscripts Healthcare Solutions,Inc. 8-K 10.4 June 18, 2013 10.7 Convertible note hedge transaction confirmation, dated as of June 12,2013, by and between Deutsche Bank AG, London Branch and AllscriptsHealthcare Solutions, Inc. 8-K 10.5 June 18, 2013 10.8 Amendment to convertible note hedge transaction, dated as of June 14,2013, by and between Deutsche Bank AG, London Branch and AllscriptsHealthcare Solutions, Inc. 8-K 10.6 June 18, 2013 10.9 Warrant transaction confirmation, dated as of June 12, 2013, by andbetween JPMorgan Chase Bank, National Association, London Branch andAllscripts Healthcare Solutions, Inc. 8-K 10.7 June 18, 2013 10.10 Warrant transaction confirmation, dated as of June 14, 2013, by andbetween JPMorgan Chase Bank, National Association, London Branch andAllscripts Healthcare Solutions, Inc. 8-K 10.8 June 18, 2013 10.11 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 10.12 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 119 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.13 Warrant transaction confirmation, dated as of June 12, 2013, by andbetween Deutsche Bank AG, London Branch, and Allscripts HealthcareSolutions, Inc. 8-K 10.11 June 18, 2013 10.14 Warrant transaction confirmation, dated as of June 14, 2013, by andbetween Deutsche Bank AG, London Branch, and Allscripts HealthcareSolutions, Inc. 8-K 10.12 June 18, 2013 10.15† Allscripts Healthcare Solutions, Inc., Amended and Restated 1993 StockIncentive Plan (as amended and restated effective October 8, 2009) 10-Q 10.3 October 13, 2009 10.16† Allscripts Healthcare Solutions, Inc. 2001 Non-Statutory Stock OptionPlan 10-K 10.19 March 31, 2003 10.17† Amendments to the Allscripts Healthcare Solutions, Inc. 2001Nonstatutory Stock Option Plan 10-Q 10.12 November 10, 2008 10.18† Amended and Restated Allscripts Healthcare Solutions Inc. IncentivePlan 8-K 10.1 May 23, 2014 10.19† Allscripts Healthcare Solutions, Inc. Second Amended and Restated 2011Stock Incentive Plan 8-K 10.1 May 24, 2017 10.20† Amended and Restated Allscripts Healthcare Solutions, Inc. DirectorDeferred Compensation Plan 10-Q 10.16 August 9, 2013 10.21† Form of Restricted Stock Unit Award Agreement (Directors) 10-KT 10.37 March 1, 2011 10.22† Form of Restricted Stock Unit Award Agreement (February 2011) 10-KT 10.38 March 1, 2011 10.23† Form of Performance-Based Restricted Stock Unit Award Agreement 10-KT 10.39 March 1, 2011 10.24† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) 10-KT 10.40 March 1, 2011 10.25† Form of Restricted Stock Unit Award Agreement for Non-EmployeeDirectors (2011 Stock Incentive Plan) 10-Q 10.4 August 9, 2011 10.26† Form of Time-Based Vesting Restricted Stock Unit Award Agreement forEmployees (2011 Stock Incentive Plan) 10-Q 10.5 August 9, 2011 10.27† Form of Stock Option Agreement 10-K 10.38 March 1, 2013 10.28† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) 10-K 10.39 March 1, 2013 10.29† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) (February 2014) 10-K 10.29 March 3, 2014 10.30† Form of Performance-Based Restricted Stock Unit Award Agreement(TSR) for Paul M. Black 10-K 10.40 March 1, 2013 10.31† 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 120 Incorporated by ReferenceExhibitNumber Exhibit Description FiledHerewith FurnishedHerewith Form Exhibit Filing Date 10.32† 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 10.33† 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 10.34† Form of Restricted Stock Unit Award Agreement for Paul M. Black 10-K 10.41 March 1, 2013 10.35† Employment Agreement, dated as of December 19, 2012, betweenAllscripts Healthcare Solutions, Inc. and Paul M. Black 8-K 10.1 December 19, 2012 10.36† 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 10.37† Employment Agreement, dated as of October 10, 2012 but effective as ofOctober 29, 2012, between Allscripts Healthcare Solutions, Inc. andRichard Poulton 10-K 10.67 March 1, 2013 10.38† Employment Agreement, dated as of October 10, 2012 but effective as ofNovember 12, 2012, between Allscripts Healthcare Solutions, Inc. andDennis Olis 10-K 10.39 March 3, 2014 10.39† Employment Agreement, dated as of May 28, 2013, between AllscriptsHealthcare Solutions, Inc. and Brian Farley 10-K 10.40 March 3, 2014 10.40† Employment Agreement, dated as of October 30, 2016, effectiveNovember 1, 2016, between Allscripts Healthcare Solutions, Inc. and LisaKhorey 10-K 10.49 February 27, 2017 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 †Indicates management contract or compensatory plan.* Omitted schedules will be furnished supplementally to the SEC upon requestItem 16. Form 10-K SummaryNone. 121 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 22, 2019 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 22, 2019/S/ DENNIS M. OLIS Dennis M. Olis Chief Financial Officer(Principal Financial and Accounting Officer) February 22, 2019/S/ MARA G. ASPINALL Director February 22, 2019Mara G. Aspinall /S/ P. GREGORY GARRISON Director February 22, 2019P. Gregory Garrison/S/ JONATHAN J. JUDGE Jonathan J. Judge Director February 22, 2019/S/ MICHAEL A. KLAYKO Michael A. Klayko Chairman of the Board and Director February 22, 2019/S/ YANCEY L. SPRUILL Yancey L. Spruill Director February 22, 2019 /S/ DAVE B. STEVENS Dave B. Stevens Director February 22, 2019/S/ DAVID D. STEVENS David D. Stevens Director February 22, 2019 122 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 California Healthcare Medical Billing, LLC California Allscripts Analytics, LLC Delaware Allscripts Next, LLC Delaware 2bPrecise, LLC Delaware 2bPrecise Ltd. Israel PF2 EIS LLC Delaware Nathan Holding LLC Delaware Practice Fusion, Inc. Delaware Ringadoc, Inc. Delaware Evalytica, LLC California Health Grid Holding Company LLC Delaware HealthGrid Coordinated Care Solutions LLC. Delaware Health Grid, LLC Florida Mahathi Software LLC. Florida 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 Careport Health, LLC. North Carolina Allscripts CV Netherlands Allscripts BV 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 22, 2019, 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, 2018. 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. 333-107793, File No.333-59212, File No. 333-135282, File No. 333-141600, File No. 333-154775, File No. 333-164294, File No. 333-167846, File No.333-175053, File No. 333-175819, File No. 333-188902, File No. 333-196415, File No. 333-218174 and File No. 333-225329). /s/ GRANT THORNTON LLPRaleigh, North CarolinaFebruary 22, 2019 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 22, 2019 /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 22, 2019 /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, 2018, 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, 2018, fairly presents, in all material respects, the financialcondition and results of operations of Allscripts Healthcare Solutions, Inc.Date: February 22, 2019 /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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