Three Firms Seeking Class-Action Lawsuits Against Allscripts
At least three law firms have filed shareholder lawsuits seeking class action status against hospital/physician software vendor Allscripts following poor first quarter financial results and the departure of several senior executives.
Such lawsuits are expected when publicly owned companies report bad news and their stock price tumbles. Allscripts’ stock fell almost 36 percent on April 27 in massive trading volume after the company announced quarterly revenue and income far below expectations, the resignation of CFO Bill Davis, the termination of Chairman Phil Pead and the resignation of three other board members.
The company in the quarterly report acknowledged problems with integration of the Allscripts and Eclipsys product lines, new releases and client satisfaction. The lawsuits allege that since Allscripts’ 2010 acquisition of Eclipsys until the first quarter 2012 financial report, the company made false and misleading statements about the progress being made to bring the two vendors together.
For instance, a lawsuit filed by Wilmington, Del.-based Rigrodsky & Long specifically alleges Allscripts made misleading statements regarding integrating disparate systems and its ability to turn fragmented product lines into revenue.
Following a request for comment, Allscripts issued the following statement: "Allscripts will promptly review the complaints and will respond in due course. The company intends to defend itself vigorously."