iSoft bullish on annual results

Australian health IT firm iSoft says that it expects to implement its first Lorenzo 1.9 site during the course of the first half of 2010, and complete development of Lorenzo 2.0 later the same year.

Speaking as iSoft released its annual results, company chief executive Gary Cohen said: “We are on schedule to deliver on the next round of commitments later this calendar year.”

The iSoft boss went on to predict that if a future Conservative government gave trusts local choice of systems, iSoft would be well positioned to benefit.

“The proposal put forward by the Tories is not about abandoning the [National] programme [for IT in the NHS] but, by eventually removing the local service providers, enabling more direct engagement by the hospital trusts with the solution provider – ie us!!”

Andrea Fiumicelli, chief operating officer, said: “We have this year successfully deployed Lorenzo Regional Care Version 1 in three National Health Service trusts.

“We have also released Version 1.9 for beta testing, which we expect to be deployed in the first half of FY10. We are currently working on the design of Version 3, which we expect to release in calendar 2010.”

The annual results show the firm reported an increase in profits to £17.5m, based on an annual turnover of £271m.

Included within the figures is the news that the company had an £12m million payment withheld by North, Midlands and East LSP Computer Sciences Corporation, due to changes in the delivery schedule of its Lorenzo product. Payment of the sum is now expected in 2010.

“While it was disappointing not to receive the expected milestone payments in fiscal 2009, this was mainly due to the rescheduling of delivery by the NHS with CSC. We anticipate that this delivery will now occur in fiscal 2010,” said Fiumicelli.

Despite this, iSoft says that its contract with CSC under NPfIT “is our largest single contract and represented approximately 23% of group revenue in FY09.”

The company also reports that the revenue it was paid by CSC increased by £11m over the past year “generated from the additional heads agreement under which we provided CSC with additional software engineers in India and the UK during the year.”

Fiumicelli spoke confidently of new opportunities in the market. “With the opportunities opening up in the South of England, we have already started to see some benefits flow through to us this year, with the award of a contract with Heatherwood and Wexham Park Hospitals NHS Foundation Trust.”

Cohen was also bullish about opportunities in the South. “First, we have around 30% of the South using our hospital systems. We had originally expected that these customers would be migrated to the Fujitsu/Cerner solution. Now this will not automatically occur,” he said.

"Second, and more importantly, we are able to supply our existing solutions, together with Lorenzo, direct to the hospital trusts in the South. The possibility of these sales had originally not been forecast by us.

“We believe that with our incumbency and the investment with the NHS that we have made with Lorenzo, we will be in a commanding position to do well in this part of the market.”

The figures provide the first set of full year results since Australia’s IBA Healthcare bought the company and rebranded itself iSoft.

The UK and NPfIT continue to count for the majority of iSoft revenues, due to service and support contracts for existing installed products, software licences for new software, and installation fees. Maintenance fees accounted for 40% of total revenues.

Some 57% of group revenues came from the UK and Ireland; with 26% from continental Europe (mainly Germany, the Netherlands and Spain); just 12% came from Australia and New Zealand.

Cohen warned investors that NPfIT was likely to continue to generate quite a lot of press as the “UK moves into an election cycle."