iSoft founder Gary Cohen quits after company posts $382 million loss, shares fall 743% in six months
The resignation also comes alongside a disappointing $382.9 million loss, with the company still blaming a volatile political environment in Britain and weak economic conditions.
The company's shares fell by 15% yesterday to $0.14 – a 52-week low point. Over the past year, iSoft shares have lost over 81% of the value, with a 74% drop occurring just in the last six months.
The value of Cohen's stake has fallen by $51 million to $8.3 million in the last 12 months. In July Cohen was also forced to sell $2.3 million worth of shares to meet a margin call.
In a statement, chairman Robert Moran said Cohen will step down as chief executive in order for a strategic review of the business to take place.
"Gary's leadership, vision and drive have transformed the company into a multinational organisation and a very significant participant in the healthcare IT segment globally," he said.
"I would personally like to thank him for his extraordinary dedication and achievements over the past 10 years as chairman and more recently as chief executive."
Cohen will stay on to assist with "transition and strategic development", Moran said, adding his "experience and knowledge of the specialised sector internationally will be invaluable".
Cohen stepped into the chairman's role 11 years ago, following two years as chief executive. In June of this year, he took on the chief executive role once again.
iSoft was contacted by SmartCompany for comment this morning, but was told senior management were unavailable for comment as they travel to Britain.
But while Moran may praise Cohen for his leadership and expertise, his role in the company has been questioned for some time. In June, BBY analyst Mark McDonnell noted Cohen's lack of leadership as a problem.
"The management weaknesses are most apparent in relation to its inability to provide reliable short-term forecasts of business performance, compounded by its habit of continually blaming factors 'beyond the control' of the company for its business reversals, (whether they have currency movements, project delays or foreign elections)."
Nevertheless, iSoft has instead blamed its horrendous performance on a volatile political environment in Britain, saying the lack of a National Programme for IT is impacting its result.
Revenue was down by 20% to $431 million, while EBITDA plummeted 77% to $30 million. The total loss recorded was $382.9 million, (including a one-off impairment of $341 million) compared to a $34.7 million profit in 2009.
Moran said the results were "disappointing", and that it will be embarking on a strategic review of the business in order to get things back on track. During this time chief operating officer Andrea Fiumicelli will fulfil the acting chief executive roll.
Part of this strategic review will include "a focus on key geographies with the best growth prospects". The company already targets operation cost savings of $50 million by June 2011, a streamlining of the company's product portfolio and a "reorientation of business development". The company will also promote new products to increase revenue.
Meanwhile, technology services group UXC recorded a 16% increase in revenue in its field solutions unit to $212.5 million in the year to June 30, but took a 10% profit cut to $7.6 million on the back of discontinued activity.
The company blames the Government's change in strategy earlier this year, altering the green loans assessment program and putting several assessors out of work.
"Rebates available on the government's home insulation and solar programs were abruptly cut," chief executive Geoff Lord said in a statement.
The quoting mechanism on the insulation program was also changed after commencement of the program. As a result... insulation activities became economically unsustainable."
The company expects a strong year ahead, saying it will change its cost base and approach to activities in the environmental sector.