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A bad quarter for iSoft

31st March 2006

10042006_isoftstandQ.jpgShares in iSoft have fallen to their lowest level in more than three years.

The problems began when the shares plummeted on news that profits would be hit by delays to its NHS roll-out programme. In a trading statement the company said at the time "...it is now clear that delivery of iSOFT application solutions to NHS Trusts will occur, in general, later than previously expected by the company. iSOFT anticipates that the overall revenue opportunity over the whole life of the programme remains broadly in line with its initial expectations."

iSoft predicted that its profits would be some £55m lower than expected because of delays to the NHS Connecting for Health programme. However, despite the company's reassurance that the rest of its business was not affected, iSoft shares initially crashed by 42% from more than £3.50 to under £2.00. In the days that followed the share price fell further to a low of £1.62.

NHS Connecting for Health were quick to issue a statement following the iSoft share price collapse, claiming that the programme as a whole was "within budget, ahead of schedule in some areas and broadly on track in others." However, it admitted "some local service provider system deployment activity is being re-scheduled. It is because suppliers and their subcontractors, including iSoft, have taken longer than anticipated to deliver effective software solutions..."  In the context of a ten year programme the impact of the rescheduling was not considered significant and CfH were quick to point out that around 900 sites already have iSoft solutions installed which are being used by more than 25,000 users.

The share price dutifully began a steady climb - but that was not the end of the bad news. In the closing days of the last month, leading CfH supplier Accenture "blamed the Manchester-based healthcare software company for costly delays to the NHS IT upgrade programme," reported the FT. Though this was not news, the fact that Accenture identified iSoft as a primary cause of delays deepened concerns about iSoft's reputation and the possibility of litigation. The shares, which had climbed to around 180p fell back to 146p. They have now lost over 70% of their value since August 2005.

 

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