The stock price of physician/hospital software vendor Allscripts dropped 40.6 percent at the open of trading on April 27 after the company announced poor first quarter financial results, lowered expectations for the rest of 2012, and announced the departure of its chief financial officer and four board members including Chairman Phil Pead.
Pead was terminated and three board members opposing the decision resigned. CFO Bill Davis will leave in May to join another company outside the industry. Allscripts has named Dave Morgan, senior vice president of finance, as interim CFO.
Nearly 45 million shares traded hands during the first hour of trading on April 27, compared with a daily average of about 3 million shares. The stock had lost up to 45 percent of its value during extended trading after the market closed on April 26.
Allscripts announced first quarter revenue of $364.7 million, which was $23 million below what investment analytics expected, according to Thomson Reuters. Non-GAPP earnings per share for the quarter totaled 12 cents, half of what was expected.
In a statement, CEO Glen Tullman acknowledged problems with integration of the Allscripts and Eclipsys product lines, new releases and customer satisfaction.
“Our overall results were primarily affected by lower than expected sales and an unfavorable sales mix, which directly impacted revenue and profit,” he said. “In addition, our investments in improving client experience and accelerating product development, as well has higher than expected software development expense, also put pressure on our bottom line.
“While Allscripts continued to win important new clients, including three new Sunrise Clinical Manager contracts in the quarter, a number of our clients and prospects delayed commitments as they wait for us to introduce new releases and demonstrate more robust integration. This dynamic, combined with the recent reorganization of our sales and service teams, were the primary factors that caused sales to be lower than our expectations.
“We believe our revised full-year guidance for the remainder of 2012 gives us flexibility to further invest as necessary to improve client experience and focus on key product requirements and innovation, which will be our highest priority.”
At least five investment firms have downgraded Allscripts stock and an article on the Forbes Web site called on Tullman to resign.
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