The share price of Australian e-health software group iSoft today continued to sink further as investors absorbed bad news about the company's operations in the UK.
The company's share price had hit a 52-week high of 93¢ late last year, but today at the time of print it had sunk another 5 per cent from yesterday's price to 28¢ — slightly above the 52-week low of 24¢ reached over the past couple of weeks.
The killer blow for iSoft was its announcement several weeks ago of issues in its UK operation acquired years ago. iSoft was previously known as IBA Health, but fought a battle to acquire its new namesake, which holds a titanic contract in partnership with IT services group CSC to implement a large chunk of the UK's new e-health network for its National Health Service (NHS).
"Delays in the roll-out (which were beyond the control of iSoft), uncertainty associated with the change in UK government and a weak European economic environment have created the need to clarify iSoft's earnings for the current fiscal year," the company said on 2 June — triggering the stock market rout.
Yesterday, iSoft attempted to repair much of the damage suffered from its UK operations by initiating a series of board changes and issuing further information maintaining the health of its operations worldwide.
Long-time iSoft chief executive Gary Cohen has stepped down from his additional role as the group's chairman, with Robert Moran — the managing director of Oceania Capital Partners (iSoft's largest shareholder) — taking his place as non-executive chairman.
Steve Garrington, a key iSoft insider, has resigned from the board as an executive director, although he will continue in his role as head of business development at iSoft. Dr Jim Fox, only appointed to the deputy chairman role after some time as an iSoft board member, has also unexpectedly resigned from the board.
In iSoft's statement yesterday, the company said it was not in breach of any of its banking covenants and was keeping its banks fully informed of the situation, although some of its arrangements might need reworking in view of its revised cash flow situation.
The company only expects the NHS work to represent 15 to 20 per cent of its total revenues in the current financial year.
"We have a core business with strong recurring revenues across many markets — not just the UK," iSoft said in yesterday's statement. "We continue experience success in several markets. Notwithstanding the economic environment, we are seeing significant growth in our revenue backlog for FY11 and beyond."
iSoft appears to be taking other measures as well to prop up its ailing share price. This morning the company announced it had completed a roll-out of a state-wide patient management system to all Tasmanian public hospitals, claiming the new platform would give over 5000 clinical staff access to up-to-date patient information.
The $4.6 million deal between iSoft and Tasmania's Department of Health and Human Services has seen 6.5 million records moved across from an existing iSoft system onto the new platform. The next stage will also see community and mental health services receive a new solution.