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A black month for iSoft

30th June 2006

Manchester based Health IT software firm iSoft is licking its wounds after a month which saw its Chief Executive depart following a massive drop in the company’s share value.  June also saw the firm sell off its Swiss operations and announce 150 UK redundancies. 

Shares in the beleaguered company have tumbled by 86% over the past year leading to an announcement that it expects full-year revenue and profit to be significantly lower than expected due to a ‘change in accounting policy’.

The resulting restatement of accounts will mean the elimination of £165m of historic revenue previously recognised over the past three years, which the company says will now be seen in future years. The firm has also announced that it will make 150 of its UK staff redundant by the end of the year as part of a cost cutting drive to slash operating costs by £25m. A 90 day staff consultation began on 15 May and the company is also looking at disposing of other assets.

Delays by iSoft in delivering its next generation Lorenzo clinical software to the NHS National Programme for IT (NPfIT) have had a significant impact on the firm's fortunes. Confidence in the company waned after being named by partner Accenture as contributing to the delays in the project which is now thought to be running at least 2 years late.  Lorenzo, which was due to be available for NHS implementation in 2004-2005, is now not expected to be up and running for significant numbers of NHS deployments until 2008-2009.

Departing CEO Tim Whiston cited the ‘negative speculation his role represented’ as the reason for his resignation which will take place with immediate effect.  He is thought to be in line for a severance package of approximately £500,000.  His acting replacement, John Weston, described iSoft as ‘creative and innovative’ saying, “We have a clear set of challenges ahead, but with the necessary determination, we will get through them."

 

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