iSoft’s Cohen stands down after losses

Gary Cohen

Gary Cohen has resigned as the chief executive of iSoft as the company has announced major losses in its full-year results.

This morning, iSoft posted a statutory loss of £221m (AUS $383m) for the financial year 2010, with total revenue down 20% to £249m (AUS $431m).

In its announcement to the Australian Stock Exchange, the company also said that earnings before interest, tax, depreciation and amortisation (EBITA) had plummeted 77% to £17m (AUS $30m).

Last year, the company reported a profit of £20m (AUS $35m) for the year to 30 June 2009.

Richard Moran, who replaced Cohen as chairman of the company in June, said the results were “disappointing.”

He added: “A difficult economic environment, adverse currency impact, delays to the implementation of the National Programme for IT in the UK, and increased cost structure all contributed to this result.”

Almost half of iSoft’s revenue (49%) comes from Great Britain, with a further 24% coming from the Euro zone.

According to an investor's pack, iSoft received £38m (AUS $65m) from NPfIT in FY 2010, a third less than in the previous year.

The company says it has lost £18m (AUS $31.9m) as a result of delays to the programme in this financial year.

iSoft will now undertake a comprehensive review of its business operations.

In addition, the company has said that it will target achieving operational cost savings of £29m (AUS $50m) to be achieved by the end of June next year.

A headcount reduction commenced in Q3 2010 to compensate for reduced revenue. Around 1,000 jobs are expected to be lost.

Although Cohen has stood down as chief executive, he will assist the board in evaluating its strategic options.

He will temporarily be replaced as chief executive by Andrea Fiumicelli, iSoft's chief operating officer.

iSoft’s shares slumped almost 20% to 12.5 cents, after it reported the loss. The company's shares have fallen around 80% this year.

Link: Announcement to the ASX