Shares of Allscripts Healthcare Solutions Inc (MDRX.O) fell as much as 17 percent on Thursday after the company abandoned plans to sell itself and instead introduced new management to run the company as an independent entity.
Allscripts, which sells systems that enable hospitals and physicians to share patient records electronically, announced the changes late on Wednesday.
On Thursday the company's chairman, Dennis Chookaszian, told analysts on a conference call that the board had conducted a rigorous review of its options and ultimately decided that the best way to create value for shareholders was to exploit the company's long-term growth potential.
Allscripts named Paul Black, former chief operating officer at rival Cerner Corp (CERN.O) and an Allscripts board member, to replace Glen Tullman, who led the company for 15 years.
Black, who addressed shareholders on the call, said his goals include freshening the company's product line, enhancing operating efficiencies and working to retain existing clients. He said he will spend time meeting with key constituents before laying out his plan in detail.
The company declined to provide a financial outlook except to say it was happy with the way the fourth quarter started. Black said he expects the company to benefit from having clarity now that the review process is over.
"There has been a lot of disruption in the marketplace," he said. "A lot of people were hesitant to make a decision until they knew who they would be working with."
Chookaszian declined to disclose whether the board's decision to remain independent was unanimous, saying the board "doesn't comment on its decisions."
The decision follows months of turmoil at Allscripts, which in June, under pressure, installed three board members nominated by the hedge fund HealthCor Management, which had lobbied intensively for the removal of Tullman.
Allscripts shares were down 14.6 percent at $9.13 on the Nasdaq at mid-day on Thursday.
Several private equity groups, including Blackstone Group LP (BX.N), were apparently interested in Allscripts, but sources familiar with the situation told Reuters suitors had become concerned about Allscripts' declining earnings and market-share losses to larger rivals such as Cerner.
(Reporting by Toni Clarke in Boston; Editing by Matthew Lewis and Steve Orlofsky)