Customer Attrition, Project Delays Dinged Veradigm Revenues in ’24
Healthcare data and technology venture Veradigm Inc. fell short of its revenue forecast in 2024 as more physician groups than expected stopped using the company’s health record and revenue cycle services and several clinical data projects ran into implementation delays.
Speaking March 19 to analysts and investors as part of a wider financial update—that included an estimate that the Chicago-based company expects to take another year or more to finalize a series of financial restatements—executives said 2024 sales should come in between $583 million and $588 million, a roughly 6 percent drop from both 2023 and the forecast leaders had published. Adjusted earnings before interest, taxes, depreciation and amortization are now expected to have been $85 to $90 million versus a previous forecast of $108 million.
Interim CEO Tom Langan and interim CFO Lee Westerfield said they expect sales this year to be flat compared to 2024. But they aren’t guiding to a profitability number; Westerfield said only that a cost-cutting program—launched after a sale process didn’t land a buyer—will help margins this year as will less spending on extra accounting services and the conclusion of the strategic review.
Outlining last year’s numbers, Westerfield said about two-thirds of the shortfall was due to Veradim’s payer and life science group, where he and Langan had been forecasting 2024 growth of about 10 percent. Instead, revenue there fell 10 percent from 2023, which Langan said was due primarily to several data exchange and gap-closure alert contracts not being put into place on their original timelines.
“The actual timing of them did not happen in the fourth quarter […] so that had a pretty dramatic impact,” Langan said.
On the provider side of Veradigm’s business, Langan said customer attrition was particularly painful late last year among large physician practice groups. In addition, he said, a lull in sales early in 2024 meant less new revenue was being generated late in the year to offset customer losses.
Looking to 2025, Langan added that he is upbeat about the “good momentum” in sales to providers of EHR and clearing-house services so far this year. The story is similar, he added, on the payer and life sciences of the business.
“’25 is looking promising but we still have some work to do, particularly on the non-recurring type of revenue that comes within our payer and life science business,” Langan said.
Amid efforts to re-establish some top-line momentum, Langan and Westerfield also are continuing to work on cleaning up Veradigm’s past financial statements and beefing up internal controls. Westerfield said that process should be completed at some point in 2026; the company recently filed its restated 2022 annual report, which cover its results from 2020 to 2022, and is now working on audits of its 2023 and 2024 numbers.
Shares of Veradigm (Ticker: MDRX) fell about 9 percent to $4.60 March 19 on executives’ financial update. In midday trading a day later, they were changing hands at $4.50. They have now lost more than half their value over the past six months, leaving the company with a market capitalization of about $485 million.
