Healthcare data and analytics firm Veradigm Inc. is “fundamentally healthy” and taking steps to move out of a turbulent phase in its history, its interim leaders told an investor conference last week.
Chicago-based Veradigm, the former Allscripts, has over the past year had to tell investors that:
- Shortcomings in its audit and financial controls functions led to revenues being overstated by about $20 million over the course of 15 months in 2021 and 2022
- It could not file its required financial reports in time, which led officials with the Nasdaq stock exchange to start (still active) proceedings to delist Veradigm shares
- Remedying the accounting problems, which have their roots in software installed in 2021, would require far more time than expected
- An independent investigation into the financial issues by the board’s audit committee last month led to directors demanding the resignations of CEO Rick Poulton and CFO Leah Jones. Yin Ho, a director of Veradigm since early last year, has been interim CEO since then and Lee Westerfield has stepped in as interim finance chief.
Speaking to the annual JPMorgan Healthcare Conference Jan. 10, Ho sought to refocus at least some of the attention Veradigm is getting—which includes an investor filing a putative class action—on its core business. Ho touted Veradigm’s electronic records trove of deidentified patient data touching more than 200 million people as well as the company’s connections to a network of more than 400,000 providers.
The company, Ho added, now is focused on payers and life sciences firms and is “positioned to be at the center of the largest platform shift in healthcare” as those players look to better analyze and deploy data that has long been housed in silos to improve the quality of care. New tech tools such as artificial intelligence have the potential to turbocharge those efforts.
“We actually could propagate and augment people’s capabilities in a way that hasn’t been dreamt of before,” she said. “And we can do it in a really a deliberate, very thoughtful, very ethical way. I’m super excited about what we can do. We’re in a great position.”
Westerfield detailed new 2023 financial guidance at the JPMorgan gathering that slightly lowered expectations for sales to about $615 million and adjusted EBITDA to roughly $129 million. He noted more broadly that the accounting and audit issues—which surfaced in the wake the company’s roughly $700 million sale of its business catering to hospitals and large physician groups in May 2022—haven’t affected the company’s subscription revenue model or its ability to be consistently profitable.
On top of that, Westerfield said, Veradigm has a net cash position of more than $230 million it can deploy in various ways. Internal investments, including in migrating systems to the cloud, are on the menu as are “strategic investments in partnerships that can enhance our growth and modernize our product mix for a scientifically advanced future.” On that latter note, Veradigm on Jan. 2 announced that it had acquired revenue cycle management venture Koha Health, which was founded nearly four decades ago and focuses on the ambulatory healthcare market.
The journey to get back on investors’ radar in a good way might take a while, though. Reaction to the new financial guidance and JPMorgan presentation last week was far from ebullient: Veradigm shares (Ticker: MDRX) fell about 12 percent Jan. 10 and didn’t bounce back later in the week. The company’s equity is now valued at a little more than $1 billion, roughly $150 million less than early this month.