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

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....???

If you want to risk your money on this stock that is your choice, but I would far rather be short than long, for that is much the lower risk!

if the directors didn't even know what a state the company was in, can it be worth the risk? not on your nelly in my opinion

I think a bid on the company is pending...that is why it is going up.

A bid is the only thing to save tbis company .... however, any potential punters need to be aware that the world and his wife have probably already jumped on board in this hope and is the actuality really much better than 50/50.

AZHAR
YOU HAVE STARTED TWO THREADS ON "ISOFT" ..... ARE YOU ONE OF THE DIRECTORS OF "ISOFT" ????

Shares down to near 55p ....the market scribes feel will sink to 35p

so that 55p will look wonderful when the shares are 35p - or even worse

iSoft tumbles on accounts probe news


Shares in iSoft Group tumbled in early deals this morning following last night's revelation that the troubled software firm has commissioned an investigation into possible accounting irregularities.

After the market close yesterday, iSoft said the irregularities affect revenue recognition under its former accounting policy in the financial years prior to and including the year ended April 2005.

The group said it does not expect a material impact on the revenue figures for the group for the year ended April 2006 of 195m-200m that were announced, subject to audit, under its new accounting policy on June 8th 2006.

In reaction to the news, Morgan Stanley pointed out that while the possible accounting irregularities should not have a cash impact for the group, it will hit investor confidence.

The broker added that more significant will be the impact on the renegotiation of banking covenants currently underway with iSoft's creditors.

Morgan Stanley said it believes iSoft's banks are unlikely to agree new financing terms until the group is able to obtain auditor sign-off on its accounts.

The broker added that the renegotiation of iSoft's key NHS contract is also likely to be dependent on the group producing an audited set of accounts, and so may be delayed.

And Morgan Stanley pointed out that concern over its accounts could also affect new signings elsewhere in the business, with potential knock-on effects for profitability and cashflow.

Meanwhile Bridgewell Securities pointed out that the latest news for iSoft sees accounting uncertainty re-emerging as an issue that investors had previously regarded as closed.

The broker added that this issue takes its place beside the uncertainties concerning the NHS's National Programme for IT contract, the possibility of a rights issue to refinance iSoft's balance sheet, and the limited opportunities elsewhere should the group fail to continue to secure its place as a supplier on the NHS contract.

Bridgewell said it expects iSoft's share price to continue to exhibit the same volatility in the near term that has characterised its performance in recent weeks.

and on it goes

it all gets grimmer and grimmer. i see the Daily Mail is suggesting there just may be a possibility of criminal charges ...that may be a million miles away but it is staggering that the suggestion should even arise. the directors, of such high academic/professional standing appear to have been so very silly

My belief is that the company will lose its stock exchange quotation as it may well not be able to file its accounts.
the threat of that possibility of criminal charges will prevent it doing a fresh deal with the banks re its covernants etc. ...and without the bank undertakings etc the auditors may well not be able to sign off its accounts. without its accounts it will lose its stock exchange quotation so the advice is to sell immediately