The stock price of ambulatory software vendor Greenway Medical Technologies fell almost 23 percent on April 29 then immediately gained 4 percent in after-hours trading after the company significantly downgraded its financial performance for the rest of fiscal 2013, which ends on June 30.
Greenway will report third quarter results on May 6, but based on preliminary results issued a profit warning for the quarter. The company expects quarterly revenue of $132 million to $134 million, compared with a previous consensus of investment analysts’ expectations of about $146.7 million. The vendor expects a net income loss of 11 to 13 cents per share in the third quarter; analysts had expected 10 to 17 cents of profit, according to The Motley Fool.
The financial downturn results from an accelerated shift in revenue generated from Greenway’s newer cloud-based subscription services for its software and growth of new revenue cycle management services, offset by lower than expected traditional system sales as well as deferred training and consulting revenue at several large enterprise client sites, according to the company. “This has had the impact of reducing system sales associated with one-time licenses, but generating a predictable recurring revenue stream,” says CEO Tee Green. “This interest in our cloud-based services is coming from all provider groups, including large enterprises.”
Consequently, Greenway’s percentage of revenue from recurring sources is up significantly during fiscal 2013, but at the expense of getting more big-dollar contracts that bring a shot of cash into the company. So, the company is badly missing investor expectations regardless of if the subscription-based model eventually brings more growth and stability.
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