Allscripts shareholders file class action suit
Allscripts shareholders have filed a lawsuit alleging the company broke federal securities laws when it went live with the newest version of its EHR clinical software, Touchworks. Allscripts officers say the suit is without merit.
"We are aware of the lawsuit and have reviewed the complaint," Allscripts officials said Wednesday. "While it is our policy not to comment on the substance of pending litigation, we believe the lawsuit is without merit and will vigorously defend the allegations."
The lawsuit, which seeks class action status, has been filed in the United States District Court for the Northern District of Illinois on behalf of those who purchased the common stock of Allscripts-Misys Healthcare Solutions, Inc. (formerly known as Allscripts Healthcare Solutions, Inc.) between May 8, 2007 and Feb. 13, 2008. It names Allscripts-Misys Healthcare Solutions, CEO Glen Tullman and Chief Financial Officer William J. Davis as defendants.
At a user conference in Orlando, Fla., July 30-31, Allscripts CEO Glen Tullman told some of the attendees that Allscripts might have rushed version 11 of Touchworks to market too quickly.
He said the company was caught off guard by providers who found new uses for the product.
Tullman and Faisal Mushtaq, the company's senior vice president of product development, said Allscripts has invested roughly $14 million to improve stability and performance, and they expect the next version, to be rolled out soon, to work more smoothly.
The complaint alleges that defendants failed to disclose the following adverse facts:
* Allscripts lacked the necessary resources to install V-11 software at customer sites; Allscripts had no historical basis to estimate the completion of V-11 or the impact V-11 sales might have on the company's 2007 revenues and earnings;
* The complexity of V-11 had materially and adversely lengthened the sales cycle and revenue recognition cycle for the company's V-11 sales contracts;
* Allscripts was currently experiencing adverse and continuing delays in the installation of V-11 software systems;
* Based on the foregoing, defendants had no reasonable basis for their statements concerning Allscripts' current and future financial performance and projections.
The law firm of Izard Nobel LLP, based in West Hartford, Conn. announced the class action lawsuit on Wednesday.
Click here to read the complaint: http://www.izardnobel.com/allscriptsmisyshealthcare/.