iSoft has put itself up for sale after appointing banks to open talks with potential bidders for the business. A successful sale would avert the need for a rescue rights issue after the company slashed its full-year outlook.
Despite revealing that it had received numerous approaches to buy the business, iSoft's shares shed a further 9 per cent to 50.75p as analysts were forced to cut forecasts to reflect the lower guidance.
The embattled healthcare software company needs to secure its long-term financial position after a nine-month period over which it has lost around 90 per cent of its value. It has appointed Gleacher Shacklock and Morgan Stanley to conduct the sale process.
John Weston, iSoft's chairman and interim chief executive, said: "We have had a lot of interest in terms of people knocking on the door since the summer but have been holding them at arm's length. We are now keen to look at whether any of those approaches could provide the stability we require."
He said that expressions of interest had come from both large and small software players as well as private-equity companies. It is likely that General Electric, which has interests in the healthcare software market, including iSoft rival IDX, would be interested. Other trade buyers could include Philips, Siemens and industry rival McKesson. Analysts argue that private equity is unlikely to be attracted to iSoft at its current valuation given the company's cash shortage and highly leveraged position.
iSoft's situation is not helped by an estimated cash outflow of up to £70m during the second half due to changes to its accounting policy.
On the lack of a new chief executive, Mr Weston said it had not been an "easy position to fill". He said that since the company is considering its strategic options, there is no "burning urgency" to fill the role.
The Manchester-based company's travails were put into perspective yesterday when iSoft's management told investors at its annual meeting that its full-year revenue would decline between 10 and 15 per cent from the £201.7m it reported last year.
iSoft had been one of the rising stars of the UK technology sector after it won a large portion of the multi-billion pound upgrade to the National Health Service's IT infrastructure in 2004. But a series of profit warnings on the back of delays to the NHS upgrade and the revelation of accounting irregularities cost chief executive Tim Whiston his job and have resulted in an investigation by the Financial Services Authority.Reuse content