* Says CEO Glen Tullman resigns
* Names board member Paul Black as new CEO
* Shares down 19 percent after-market
By Zeba Siddiqui
Dec 19 Embattled healthcare technology firm
Allscripts named its board member and former chief
operating officer of rival Cerner Corp Paul Black as
its CEO, replacing Glen Tullman, and said it ended a review of
The move, effective immediately, raises new questions for
the direction of Allscripts Healthcare Solutions Inc after
activist shareholder HealthCor Management installed three of its
nominees to the company's board last summer, following a bitter
fight with Tullman.
Allscripts has struggled to boost new business following its
acquisition of Eclipsys Corp in 2010. It had hoped to expand
into software and equipment for hospitals and healthcare systems
with that purchase but ended up losing business to Cerner Corp
and closely held Epic Systems Corp.
The company, which has been the subject of takeover
interest, also said on Wednesday that Lee Shapiro would step
down as president.
Allscripts shares, which have nearly halved in value this
year, were down 19 percent at $8.70 in extended trade on
Wednesday. They had closed at $10.68 earlier on the Nasdaq.
"Both Glen and the board of directors believe that after
Glen's 15 years of leadership, it is the right time now for a
new leader to focus on execution, position the company to
deliver shareholder value and lead Allscripts through its next
phase of growth," Allscripts spokeswoman Ariana Nikitas said.
Tullman's resignation comes months after Healthcor cited
problems with his leadership and demanded his ouster.
"I think Glen has been under a lot of pressure since the
attempted coup by former board members and HealthCor demanded
some changes and Allscripts agreed to put some of HealthCor's
appointees on the board," said Anthony Vendetti, an analyst at
Maxim Group, adding he has personally known Tullman since he
Black left Cerner in 2007 after more than 12 years with the
company, helping to make it a market leader with more than $1.5
billion of annual revenues and playing an instrumental role in
its double-digit organic growth, Allscripts said.
"I think (Black) is the ideal candidate for CEO," said
Vendetti, who has a "buy" rating on Allscripts stock and a price
target of $15.
"We view this news positively as Mr. Black is well regarded
in the industry. With that said, we maintain our neutral rating
for the time being," Steven Halper of Lazard Capital Markets
wrote in a note.
LONG ROAD TO GROWTH
Allscripts stock has fallen more than 42 percent this year
amid weak bookings that hampered sales and profit.
The company withdrew its full-year outlook in November, as
it began to consider strategic alternatives. Later that month,
Reuters reported that Blackstone Group LP had emerged as
the frontrunner to buy the company but that the two sides were
far apart on price and a deal was highly uncertain, according to
people familiar with the matter.
Black is no stranger to the buyout industry, having served
as operating executive of Genstar Capital LLC, a private equity
firm, and senior advisor at New Mountain Finance Corporation
, an investment management company.
His background may come in handy as he seeks to turn around
the company's financial performance in a difficult environment
for healthcare IT firms. These companies face a dwindling
customer base as hospitals consolidate physician practices into
their existing vendors.
"The expectation is that it will take some time (for the
company) to fundamentally turn around its business," analyst
Vendetti said. He added that Allscripts' main goal should be to
re-establish client trust in their products and the ability to
integrate their product portfolio.
A comment in the Allscripts statement from Tullman, who had
been CEO since 1997, made no reference to the reasons for his
departure. He said he was confident that Allscripts was in good
hands and had a bright future ahead.
Analyst Halper said he remained concerned about the
long-term growth prospects of the company.
"With the selection of Paul Black, hopefully the company can
redefine its strategic direction," Halper said.