iSoft warns of 'significant' NPfIT delays
30 Jan 2006 Click to see the

British healthcare software developer iSOFT has warned that delays in delivering software to the UK National Health Service would slash its previous revenue and profit forecasts.

In a trading statement this morning the company said that total full-year revenue generated from the programme is expected to be around 30m, about 55m pounds below previous expectations, with operating profit seen reduced by about 45m.

According to the trading update the Manchester-based company says that as a result of delays it no longer expects to see any revenue in the second half of the year from delivery of software to the NHS National Programme for IT.

"As has been widely reported, the National Programme for IT in the NHS in England has been experiencing a significant degree of rescheduling. The process to revise delivery plans and timescales within the programme is on-going. As a result it is now clear that delivery of iSoft application solutions to NHS trusts will occur, in general, later than previously expected by the company," the firm said.

The iSoft statement added: "The impact of the rescheduling process is likely to be that the phasing of revenues will be less concentrated in the earlier years of the programme than previously anticipated."

The warning had an immediate effect on the company's share price which at one point had plummeted to a three year low.

iSoft's warning follows a analyst briefing given by health IT services company System C on 25 January, at which the company warned that revenues were down due to delays caused by a "shortage of third party product to implement". Although it did not mention iSoft, System C is active in the three northern clusters using iSoft software.

Industry sources indicate that the delays and rescheduling are related to delays in the availability of the strategic Lorenzo software solution iSoft is contracted to provide for three of the five regions of NPfIT - North West and West Midlands, Eastern and North Eastern.

The delayed system is the second phase of the integrated strategic solution to be provided to NHS trusts under NPfIT [known as P1R2] incorporating functionality such as results and order communications, clinical noting and departmentals such as maternity, theatres and A&E.

Although almost 50 trusts have been provided with a version of iSoft's iPM patient administration system under NPfIT, with a few exceptions these have been community and mental health trusts with a pressing need for a PAS.

But with significant delays in the availability of the strategic P1R2 clinical solution, there is currently little new to offer more complex acute trusts and a growing gap has opened up in the implementation schedule once current implementation work has been completed.

In a statement CfH said: "Some LSP 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 that interface with national applications such as the Spine and Choose and Book."

The statement added that in the context of a ten year programme the impact of the rescheduling was "not significant", and said suppliers did not get paid until they deliver. "Completion risk lies with suppliers. We continue to look to our prime contractors who are responsible for managing their software suppliers performance."

In its own statement LSP for the North West and West Midlands, CSC Alliance, told EHI: "Since the start of the National Programme for IT the CSC Alliance has, we believe, deployed more Patient Administration Systems across the North West and West Midlands cluster than the other LSPs working across the Programme. All of the CSC Alliance implementations have used the iSoft solution."

http://www.e-health-insider.com/news/item.cfm?ID=1670

Get out fast of these it was a warning sign that the directors never bought any for 12 months prior to the profit warning.

Recent directors purchases!

http://moneyam.uk-wire.com/cgi-bin/articles/200602211223297126Y.html

http://moneyam.uk-wire.com/cgi-bin/articles/200602241024378960Y.html

Fly by Night

Red

The Sunday Times April 30, 2006

Isoft accounts under fire
Richard Fletcher
ISOFT, the troubled software firm, has become embroiled in a row with a City analyst about its accounting policies.

News of the row is the latest blow to Isoft, which issued a profit warning on Friday. Its share price has fallen 70% since the start of the year.

Isofts share price plunged more than 10% on Friday as 12m shares changed hands. The unusually heavy trading before the official announcement of a profit warning could spark an investigation by the Financial Services Authority. After the warning the second this year the shares closed at 117p.

In a note to clients last week Charles Brennan, an analyst at the investment bank ABN Amro, claimed discrepancies ... continue to undermine confidence in the accounts.

The row centres on the level of revenues from a crucial NHS contract. In his note, Brennan claimed that the company recognised 29m of revenue from the NHS National Programme in the year to April 2004, compared with the 5m that was apparently disclosed at the time.

Isoft insisted there was no discrepancy. The company said: We recognised that some confusion arose, which is why we increased the level of disclosure in our October 2004 interims and have maintained that level since.

At the outset, our expectation was that our National Programme revenues would comprise of new software product being 5m. It became clear that the contract would also involve the sale of traditional software, and for a longer time than originally expected, being 25m, which had been disclosed within 64m of product sales.

ABN Amro a former adviser to Isoft is not the first City analyst to have questioned Isofts accounting policies. Bridgewell, the companys broker, warned clients this month that the company might have to restate its revenues.

Isoft has been hit hard by delays to a 6.2 billion programme to modernise the NHS computer system. Only two years ago Isoft upgraded its own profit forecasts for the NHS deal boasting that it could make 500m rather than 300m from the contract.

The shares soared on the news and within weeks the firms founders, including Patrick Cryne and Stephen Graham, sold more than 40m of shares at about 425p each.

The recent bad news has propelled IOT towards the top of my recovery watch list and I'm beginning to take a keen interest in the Co. First impressions, fwtw, are that despite hiccups, the NHS software is quite highly regarded and in any case commitments may be such that there is little scope for a change in direction by the NHS; so, the've got to get it right and be paid for it.
Meanwhile, the market is worried there are yet more skeletons in the cupboard and depression is heightened by all the other scandals surrounding this Govt; in addition, the market generally may come under fire from the "Sell in May" brigade, which could hit exposed stocks like IOT hard.
I'm will be looking for an sp sub 100, but I think when I return from Cowes week, this might be in uptrend.
sd.

Stay in Cowes an extra week and you should have your "sub 100" on return.

No happy sailors aboard this fast sinking ship, I'm afraid, and it's only a matter of time before the cry of "every man for himself!!!" will be ringing out loud and clear.

"Company overboard" I'd say skipper!

Harry Peterson: Thanks for that: yet more gloom has come to light since my earlier post, I now see from my Sharescope that the sp dipped below 80p on 6th April and I'm coming across hints that there's not much in the way of assets to support even that price.
But I like to be optimistic about recovery stocks: the storm will pass, holes will be plugged and IOT will stay afloat. It's just a matter of getting right the timing for us to board.
sd.

Bound to be two very opposite POV's at a time like this./ If you're in these shares, it was time to bail after the first profit warning and if still being in will leave you feeling very sore at having to get out now (no other choice IMHO). If you are not/have not been in, then I'm with sd and would not be surprised by a rebound at some stage over the next 6 months when an up s/b would seem to be the ticket, there being no clear-cut fundamental value on which to buy actual shares until another year's accounts are reported without qualification or argument from the institutions.

WDIK
DYOR
sd

while being fortunate in not being a holder of these shares, I would ask any poor unfortunate what is the appeal of continuing to hold on? ...... None of us likes to take a smack, and it is psycholigically difficult to do so, but unless a serious rally is in the imemdiate offing (and why should it be?), then the blinding truth is to take the singed remains and invest it elsewhere.

Squid.

The rewards outweigh the risks at this point.
I feel a stron rally comming on. Lets face it the NHS will make the software work - they have to.

Hello

Hello Lad. That was a waste of time then. DES is flying today though.

transco: I agree that it's now looking more promising, and sooner than I thought.
They have had such bad press recently, surely there can't be any more skeletons left in the cupboard. And like you, I can't see any way that the're not going to be pressed to continue with the NHS contract and be paid for it.
But I do like a chart that shows a long basing area after it's fallen off a cliff (look at BLVN for example) and I'm not sure whether we're going to have that luxury here, so I.m going to continue sitting on the fence.
sd.

Think you're on the right track there squidd.
But - continue and be paid for what when? There will surely be penalties for their late delivery so far - and I don't know if this has been factored in. I just trade on TA - rumours based on fact were rife enough a year or more ago, but the fluff kept them going.

Chaps,

I have worked in the NHS with the ISOFT product and its not that bad.
Any new software has bugs and there will be resistance to change from within the NHS, however my gut feel was that on the ground many users were warming to the new systems.
Keep the faith.... it serves no pupose to put ISOFT out of business the new systems must be made to work.

the shares went down by a third yesterday, as I said before it was a warning sign that the directors bought nothing in the last 14 months

anybody got anything on kazakhmys.

Interesting read for IOT shareholders a possible bid imminent?

http://observer.guardian.co.uk/business/story/0,,1799933,00.html

Does anyone think this company will have a bid on the horizon shortly and if they do I think it will be a bargain!!

Keep well clear of ISOFT is my advice. Reward is outbalanced by RISK. You have been warned

Any share dealing is a risk....but surely the risk is worth it for the short term, it has recovered rather well since it bottomed out and with the bid speculation in the air.
It is interesting to note that there has been a lot of 'notification of major interest in shares' in the RNS for past three days. This must mean something....???