iSoft won't take a hit from UK contracts: CEO

iSoft executive chairman and CEO Gary Cohen says little chance of NHS National Program for IT being scrapped

ASX-listed healthcare software provider iSoft (ASX:ISF) has down played the possibility of taking a hit from possible changes to its lucrative UK contract for the NHS National Program for IT.

Comments from chancellor Alistair Darling ahead of the UK government's pre-Budget report this week suggested the 12.7 billion pound program could be scrapped.

Speaking to Boardroom Radio Australia iSoft executive chairman and CEO Gary Cohen, said the government had since clarified the chancellor's statements and that there was little chance of the program being binned.

"The deliverables we have got scheduled for the next 12 months are on track and will go ahead," he said. "While I expect there will be some reshaping of contractual arrangements to apply them to more relevant areas, that will potentially have more relevant benefits to us rather than some negative connotations which the market would probably expect from the first statement that was made."

Cohen continued that he expected the UK government would be looking to get "more quick wins" but that regardless of what happened iSoft's 60 per cent share of the market held it in good stead going forward.

"Cut to the chase – what it means is if the program slows down or changes shape and form, we have a natural edge to support our solutions and generate revenue," he said. "And more importantly we have the opportunity to start selling additional solutions in areas that otherwise might previously have been denied. We think there will be some reshaping and changes but in the overall context of what is going on we see it as more advantageous than non-advantageous to us."

At the end of September iSoft posted a $20m growth in its net profit after tax (NPAT) to $34.7m, up from $14.7m for the last financial year.

The company, which operates in 39 countries and has about 7700 employees, also record total revenue growth of $540.1m up from $360.9m the previous financial year. EBITDA was $132.4m, up from $94.4m. The bulk of the company’s revenues (57 per cent) came from the UK and Ireland, largely driven by iSoft’s involvement in the NHS National Programme for IT. Continental Europe accounted for 26 per cent, A/NZ 12 per cent and the rest of the world 5 per cent.

Licences accounted for 35 per cent of revenues, maintenance & support 40 per cent, implementations 20 per cent and other services 5 per cent.

The company also announced in August it is halfway through a three-year IT transformation aimed at connecting its global offices, positioning the e-health company for further rapid growth and developing a proactive information infrastructure.

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