iSoft fights to get back in the black

E-health company iSoft has logged a net loss after tax for the half year to 31 December 2010 of $84.1 million, staunching the outflow of cash while it attempts to turn itself around.

For the year to 30 June 2010, the company had reported a staggering $383 million loss, announcing plans to carry out a major restructure, cutting staff and implementing other operational savings.

However, the company has put a positive spin on the results for this half year, pointing to the earnings before interest, tax, depreciation and amortisation (not including restructuring costs or exceptional items) of $9.8 million. This compares to -$8.4 million in the half year to 30 June 2010 and $27.5 million in the half year to 30 December 2009. Restructuring and refinancing costs contributed to a high operating cash outflow for the first half year.

Newly appointed CEO Andrea Fiumicelli said that iSoft continued to face a difficult operating environment, but added that it continued to grow market share with new business. "The improvement in EBITDA during the half was encouraging evidence that the restructuring initiatives are beginning to deliver."

"I have a relentless focus on cash generation. The first half was impacted by a number of on-off items associated with the operational turnaround as well as normal seasonality, but I expect the second half to deliver positive operating cash flows."

The company has achieved $19 million in cost reductions over this half, mainly through a 28 per cent reduction in headcount over the 12 months to 31 December. Marketing and travel costs had also been slashed and the company said it was on track to achieve $30 million in savings for the end of the year.

It has also been trying to generate cash. It said that order intake was "encouraging", growing 7 per cent to $69.6 million for the second half of the first half of 2011.

The company is expecting revenues for the full 2011 financial year to be slightly lower than previous targets because of weaker than expected trading conditions. In an effort to reduce indebtedness, it was considering a cash injection, sale options or both.

Robert Moran would be stepping down as chairman, according to the company, but would remain on the board. Bob Ellis will be appointed to the board as a non-executive chairman.