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June 26, 2009 2:55 am
Misys, the banking and healthcare software group, has reported better-than-expected results from Allscripts, which it bought in a controversial deal last October.
A trading update revealed a strong performance at the combined Allscripts-Misys healthcare business, where fourth-quarter order intake for traditionally licensed products was $76m (£46m) compared with $74m a year ago. Orders for its new subscription-based service rose from $8m to $27m.
The acquisition of US healthcare software group Allscripts attracted criticism because it pushed the group further into debt.
At the time, chief executive Mike Lawrie’s assertion that improved cash generation would fund the deal was met with scepticism from analysts and investors. The group also indicated that its net debt for the year would be cut by one third in the second half.
However, net debt at the end of its financial year to May 31 was in line with its guidance at £130m ($214m), 35 per cent below the £200m net debt reported at the half year stage.
Referring to the reduction in debt, Mr Lawrie said: “I’m pleased with a lot of things but l really am very pleased with that. Misys really is a different company compared with three years ago.”
Mr Lawrie expects the figure to come down further in the next financial year but has not yet set a target.
David Toms, an analyst at Numis Securities said analysts were already forecasting margin expansion in the coming year, “The big question to us is whether the outperformance represents pull-forward from future years, or represents an acceleration in margin potential,” he said.
A month ago Misys refinanced the debt package it had agreed to secure the acquisition of Allscripts.
Misys said that total revenues for the year rose by about 3 per cent and total order intake rose by about 2 per cent. Reported group revenue from continuing operations rose by about 40 per cent to £695m, it said.
Trading at both the Banking unit and the Treasury and Capital Management unit were hit by slowing spending in the banking software market.
Shares in Misys closed down 2¼p at 169½p.
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