Lorenzo to be developed until 2012

ISoft has announced that it will continue to develop its Lorenzo electronic patient record software under the National Programme for IT in the NHS until September 2012.

In a statement to the Australian Stock Exchange, the company said: “Following the delays with the roll-out of Lorenzo under its NPfIT contract, it is now expected that the development work on Lorenzo will continue until September 2012.”

Over the past few months, there has been uncertainty around how many releases of Lorenzo would be provided to trusts following announcements by the previous government that £600m would be clawed back from NPfIT, in part by reducing the functionality to be provided through the programme.

In February, a number of sources claimed that Lorenzo would stop at Release 2 and letters were later sent out by some strategic health authorities claiming that the majority of Release 3 and all of Release 4 were out of scope.

Both iSoft and CSC have declined to comment on what further releases will be delivered to the NHS and whether there will be any further delays to the programme as a result of the extended development.

Last month, iSoft revised its revenues down for the full 2010 fiscal year by around £17m (AUS$30m), citing political uncertainty in the UK as one of the key reasons for it not being paid for anticipated milestones.

The downwards revision led to a sharp fall in iSoft shares, which slumped 30% to 39 Australian Cents and have continued to drop as low to as low as 13 Australian Cents in recent weeks.

In an Australian Stock Market update in June, iSoft said its revenue for fiscal 2010 was now in the range of £258m to £266m ($440 to $455) million, while EBITDA was likely to be in the range of £26m to £35m ($45m to $60m), compared the full fiscal 2010 outlook of 275m ($470m) and an EBITDA of £66m ($113m) announced in February.

The company, which is still in the process of having its full fiscal year results audited, further reduced its estimates in a statement earlier this week, claiming: “The current estimate for the outcome of the year is revenue of approximately AUS $430 and EBITDA of approximately AUS$40m before exceptional and one off items.”

It added: “This has led to an accounting adjustment of the revenue recognised to 30 June 2010 of $4.1m. This adjustment does not have any cash flow impact.

"The additional time required for delivery will mean that the revenue recognition of milestones, which are a fixed amount under the percentage of the completion method, will now be extended over a further 12 months.”

At a press briefing for the launch of the white paper ‘Equity and excellence: Liberating the NHS’, NHS chief executive Sir David Nicholson said clarification on the future of NPfIT would come “in the next four weeks.”

However, the white paper itself indicated that the government wants a "plural system" of IT providers.

Link: ISoft market update, Tuesday 13 July 2010