iSoft CEO to step down after company's poor results

Gary Cohen, the CEO of one of the main software suppliers to the NHS, is to step down after the company announced poor full-year results to the end of June 2010. iSoft's products support work within about 30% of NHS trusts. Its Lorenzo...

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Gary Cohen, the CEO of one of the main software suppliers to the NHS, is to step down after the company announced poor full-year results to the end of June 2010.

iSoft's products support work within about 30% of NHS trusts. Its Lorenzo patient records system is supplied to the NHS by services company CSC under the £12.7bn National Programme for IT [NPfIT].  

The share price of iSoft was today at 14 Australian cents, close to an all-time low, after it reported a $382.9m (£220m) loss, compared with a $34.7m (£20m) net profit last year. The Australian reports that the company’s share price has fallen about 80% this year.

A year ago iSoft was predicting that its Lorenzo technology in the UK would connect the patient records of 30 million people" under the NHS's National Programme for IT [NPfIT]. Now the company has announced what it says are disappointing results, partly because of "delays in the implementation of the UK NPfIT".

iSoft's chairman Robert Moran said the disappointing result "does not reflect the underlying strength and technical sophistication of iSoft’s prodicts, the Company’s global footprint, or the quality and decication of its staff”.

He added that the “core business of the Company remains healthy”. It has a “strong and growing pipeline of business for FY [financial year] 2011 that should compensate for the expected decline in the National Programme for IT revenue”. 

Total turnover fell 20% to $431m (£248m) and profit before interest tax depreciation and amortisation fell 77% to $30m (£17m).

There was a one-off impairment charge - the amount by which stated capital is reduced by distributions and losses - of $341m (£196m).

“As a result of the more subdued economic environment in iSoft’s markets, the companby has reduced its internal projections for growth … this has resulted in the company recording a significant impairment of its carrying values of intangibles (primarily goodwill associated with the iSoft acquisition) and deferred tax assets.

"Consequently the Company recorded a total impairment of these items of $341m (£196m) in FY (financial year) 2010. As a result iSoft reported a statutory loss of $383m (£220m) in FY 2010”.

Moran said iSoft’s board has started an “in-depth review of the company’s business operations”. It has already reduced its product portfolio from more than 200 to 150.  As part of the review the CEO Gary Cohen “has agreed to step aside as CEO to focus on assisting the Board in the evaluation of strategic options for the company”.

An executive search firm has been hired to help find a new CEO. Meanwhile iSoft's chief operating officer Andrea Fiumicelli, who joined the company in 2008, will be acting CEO. The company is looking for candidates from the UK and Australia to “join the Board in a process that will Board renewal”. A restructure of debt is needed and the company is looking at “potential asset disposals” which avoid damaging the core business assets.

In 2009 iSoft said it had "succeeded beyond our expectations"

A year ago iSoft declared: “Today, having succeeded beyond our expectations, iSoft can truly take its place as a global leader in healthcare information technology.

“In the past year we have strengthened our global footprint, refreshed each of our
businesses, and reinvigorated relationships with our customers....

“The mix of revenue sources across licence fees, maintenance and support and professional services, provides a stable flow of income that is not overly dependent upon newly contracted software licences…."