iSOFT CEO departs following ‘disappointing’ results

A majority of iSOFT’s business (73%) is in the UK and Europe, and with the Australian dollar’s growth against both Sterling and the Euro over the last twelve months the company has attributed a AUS$109 million adverse impact on turnover.

 

The company has confirmed it is undergoing a strategic evaluation, stating a “strong” pipeline is in place over the next 12 months, which should “compensate for the expected decline in the National Programme for IT revenue”. Despite this reassurance, iSOFT admitted both the timing and outcome of the strategic initiative process was “uncertain”.

 

The financial results, attributed to a number of factors including delays to the NPfIT (which the company said was the biggest contributor to a fall in turnover to AUS$30 million), have followed a turbulent period for the iSOFT. 

 

iSOFT was forced to apologise to the NHS and NPfIT partner CSC back in June, for blaming both parties for possible shortfalls in its financial results as a result of delays to the programme. Although planned for April, Lorenzo Release 1.9 finally went live at the acute University Hospitals of Morecombe Bay NHS Trust in June. At the time, Cohen described the deployment as a “critical milestone” for iSOFT. 

 

Cohen himself admitted at the end of that month he’d been forced to sell some of his shares in the company, following a dramatic drop in iSOFT’s share price. Three years ago the company’s share price was AUS$1.52, but by June this year they were worth just 17.5 cents; after today’s financial results the closing price on the Australian Securities Exchange stood at just 13.5 cents.

 

Although he’s now stepping aside as CEO, Cohen is to remain with iSOFT during the strategic evaluation period; his interim replacement is healthcare ICT veteran and current iSOFT COO, Andrea Fiumicelli.

 

Chairman Robert Moran said the financial results were disappointing, and didn’t reflect the “underlying strength and technical sophistication of iSOFT’s products, the Company’s global footprint or the quality and dedication of its staff. A difficult economic environment (particularly in the public sector in a number of the Company’s markets), adverse currency impact, delays to the implementation of the National Programme for IT (NPfIT) in the UK and an increased cost structure all contributed to this result.”

 

“The decline in the NPfIT revenues and the overall slowing down of growth in the core business hit particularly hard in the second half. With the cost structure relatively fixed this flowed through to a decline in earnings.” Moran added.

 

As the future of the National Programme for IT is set to be unveiled as part of next month’s spending reviews, questions remain as to whether today’s news marks the first of many casualties in the months ahead. 

 

Mike Laphen, CEO of iSOFT’s NPfIT partner CSC, warned in a statement last month if the NHS contract is tampered with too much, the company would fight its corner.  "I would just say more than likely we would wind up in disputes and therefore, I don’t think either one of us wants that to happen.”

 

“I’m not going to speculate on how disputes will come out or anything like that, but I’m sure the government would take one position, we’ll take another position, but I think we’re both working cooperatively to assure that that doesn’t happen and that we’re moving forward within the affordable envelope that the NHS has."