iSoft revenues and profits increase. In October, it bought Spanish healthcare specialist Novasoft Sanidad SA, and it intends to sell Lorenzo alongside Novasoft's existing software products.
For the six months to 31 October 2004, healthcare software specialist iSoft is reporting revenues of $106.2m, an increase of almost 14% compared to £93.5m for the six months to 31 October 2004.
Ovum. David Bradshaw

Operating profit increased by 9% to £19.1m (2004: £17.5m) - because iSoft has restated the previous year's numbers to IFRS, this is higher than the previously published operating margin. After finance charges, profits before tax rose to £17.8m from £16m last year, and after tax the net profit was £12.3m compared to £11.7m last year.

Comment: These look to be a good set of results for the company. One minor reservation is that the operating profit margin has dropped by 0.75% to almost exactly 18%. We trust this is little more than a small variation and will pick up to the 26% achieved for the full year. It seems that much of iSoft's revenues are loaded in the second half - at least they were last year. In the earnings statement, Chief Executive Tim Whiston gives no specific guidance other than that the directors are "confident of the outturn of the full year."

The company has to prepare for a time when the boom in NHS spending on IT ends - and with the downgrading of UK chancellor Gordon Brown's economic forecasts, this may come sooner than previously expected. With 75 NHS trusts as customers in the UK, iSoft has a strong opportunity to up-sell customers for its older products to its newer 'strategic' product Lorenzo. iSoft says that some revenues in the UK and Ireland have already come from upgrades and extensions from existing customers, but it has to get more.

The company is also seeking to get more revenues from other countries. Its lead customers for Lorenzo are in Germany and Singapore, and it has won deals in the Netherlands and, outside Europe, in Australia and New Zealand.

In October, it bought Spanish healthcare specialist Novasoft Sanidad SA, and it intends to sell Lorenzo alongside Novasoft's existing software products.


It has also established distribution channels in Russia and other Eastern European countries, though there was no news of any sales yet.

So the prospects look good for iSoft, and it is certainly doing the right thing in growing its strategic product ahead of the inevitable cooling off of the UK NHS market.