Paul Black, named CEO in December in a management shakeup, said he wanted to move quickly to improve operations at the Chicago-based software maker and make the company more responsive to clients. He said he'd also maintain research and development spending at current levels.
"We're going to benefit from having clarity," Black, 54, told analysts on a conference call. "There's been a lot of disruption in the marketplace from people wanting to understand what this company was going to look like by the end of the year, a lot of people who were hesitant about making a decision. I think that's a very big piece of the missteps during the course of the year."
Allscripts on Dec. 19 fired former CEO Glen Tullman, who had led the company since it first sold shares to the public in July 1999. The company also said in a regulatory filing that it would end a process of considering "strategic alternatives," including a sale, that began earlier this year.
"I fully understand that this is an important time in the company's history," said Black, a current Allscripts board member and former chief operating officer at Kansas City, Mo.-based Cerner Corp. "What's clear to me is that we have a good strategy, a robust set of solutions to offer" to doctors and hospitals.
Still, he said, "Right now I don't think all our clients are happy. We've got a lot of work to do in that space."
The shares will face "significant pressure" as investors who had piled into the stock waiting for a deal "crowd out the door," said David Windley, a Jefferies & Co. analyst in Nashville, Tenn., in a note to clients.
While Allscripts' third-quarter results showed "deteriorating fundamentals," the company introduced new software products in the fourth quarter that give some hope for a turnaround, Windley wrote. "Unfortunately, though, these likely won't contribute much in the way of bookings or revenue" until next year's first quarter.
Allscripts began seeking a sale after a board upheaval and a shareholder lawsuit earlier this year that questioned its leadership. In September, the company lost a bid for a $302 million contract from New York City's public hospitals and later in the fall reported revenue declines in the third quarter.
The company had received bids from private equity firms, including Blackstone Group LP, Carlyle Group LP and Silver Lake Management LLC, Bloomberg News reported. "The board concluded, however, that the best course at this time is to develop Allscripts' long-term potential under the direction of our new management team," Dennis Chookaszian, the board chairman, said in a company statement announcing the changes. In addition to Tullman's departure, Allscripts said Lee Shapiro, the company president, was fired and will serve as a consultant to Black for as long as six months.
Black said one of his priorities would be enticing Allscripts clients to use a wider variety of the company's products, which help with administration as well medical records. "It's hard to go out and build the install base like this company possesses," he said. "I see that as kind of the mother lode upon which you want to build and expand the organization."
-Alex Nussbaum and Elizabeth Lopatto, Bloomberg News