Yesterday's announcement of the NHS contract delays wiped 45 per cent off the market value of iSoft. The shares closed down 160.75p at 200p, the lowest since it floated in July 2000.
The company, which was picked for the multimillion-pound project to upgrade systems for the NHS in 2004, warned that revenues from the programme would come to only £30m this year, less than half the £85m it had expected. That will cut operating profits by £45m, with annual revenues expected to come in at £240m.
Analysts at Seymour Pierce more than halved their pre-tax profit estimates for this year to £42m, while Panmure Gordon downgraded the stock to a sell. Lorne Daniel, at Evolution, said: "The NHS is their flagship. They are in deep trouble if they can't deliver."
Analysts at Morgan Stanley said the magnitude of the warning came as a surprise. "We think this announcement will leave investors trying to work out if iSoft is a good company caught up in a bad contract ... But we fear that given the size of this warning, the historic debate over accounting concerns will reopen."
The NHS project aims to connect 30,000 GPs in England to almost 300 hospitals over the next 10 years, and to give patients access to their personal health information.
NHS Connecting for Health, the Department of Health agency in charge of the IT programme, said yesterday the project was ahead of schedule in some areas and broadly on track in others, and has 180,000 registered users across the country.
It said parts of the system roll-out were being rescheduled because "suppliers and their subcontractors, including iSoft, have taken longer than anticipated to deliver effective software solutions that interface with national applications. Suppliers do not get paid until they deliver."Reuse content