Tullman out at Allscripts, Black in
Allscripts CEO Glen Tullman has resigned, and Paul M. Black, former chief operating officer at Cerner, is taking the reins as president and CEO of the company after months of turmoil and speculation on its potential sale.
Black is currently an Allscripts board member. The company, in a late statement on Wednesday, said Tullman, after more than 15 years at the helm, would step down from his positions as CEO and board member. Lee Shapiro will also step down as president, effective immediately, and will serve as a consultant to Black for up to six months.
In addition, Allscripts announced that its board has formally concluded its evaluation of "strategic alternatives" related to the sale of the company. There had also been speculation that Allscripts might go private.
That won't be happening, said Dennis Chookaszian, Allscripts' chairman of the board, on a conference call Thursday morning.
"Over the course of what was a thorough and rigorous process, the board allowed interested parties to conduct due diligence related to multiple alternatives, including a purchase of the company," he said. "However, the board concluded that the best course of action at this time is to develop Allscripts' long-term potential under the direction of a new management team."
Chookaszian paid tribute to Tullman and Shapiro for having been "instrumental in Allscripts' growth over the past two decades," and for putting forth a "vision [for] meaningful and positive change" in a time of rapid health IT adoption.
However, he said, "It's the right time for a new leader."
And Black is the right man for the job, said Chookaszian, pointing to his high-profile in the health IT industry and, significantly, the "double-digit organic growth" he helped foment at Cerner as its chief sales officer: His "experience on solutions and sales side, as well as the client side," is "very, very important."
For his part, said Black, "We're not going to waste any time getting to work. ... We have a good strategy, a robust set of solutions to offer, a broad client base and a very talented team. We're committed to our technology roadmap and to our R&D investment strategy."
To that last point, he said Allscripts is on track to spend some $200 million on research and development in 2013 to develop innovative technologies for "a healthcare industry that is on the cusp of significant change."
That said, he insisted that the company's existing portfolio "is a strong one." Allscripts' clinical and financial tools, care coordination technologies, patient and consumer engagement tools, mobility solutions and analytics platform will be the "critical building block" for "delivering on our client commitments."
But Black conceded that there are issues with integration that are still being sorted out in the years since Allscripts' $1.3 billion merger with Eclipsys in 2010. "We continue to work on solution integration across the care continuum, particularly acute and ambulatory settings," he said.
Even as he touted strides on ICD-10, and on getting Stage 2 meaningful use readiness built into Allscripts' core EHR platform, and even as he promised more "disruptive, open technology that will transcend single healthcare organizations," Black said the firm's marching orders were clear: to "provide common user experience, aggregate disparate applications and support a single patient integrated workflow to maximize care coordination."
As for Allscripts' clients, "I am well aware of the challenges that we face," said Black. "I can assure you that we are absolutely intent on strengthening our relationships and commitments with all of our key constituents."
Later in the call, Black conceded that, "I don't think right now that all of our clients are happy. We've got a lot of work to do in that space."
Still, he pointed out, that there are many customers who have had the chance to "move to other options over the last five years, but have chosen to stick with us."
He promised to reward their patience. "There will be no substitute for results," he said. "We need to move quickly."
Toward that end, he plans to be "spending a ton of time visiting clients around the globe" in the coming months, to "solidify our client base."
And he hopes the Allscripts' relationship with those customers will "benefit from having clarity" after the tumult of the past year.
"There needs to be a cadence inside the company with respect to the top line, a cadence with respect to the engineering organization and a cadence with respect to all operations, so we have a more predictable experience internally, a more predictable experience externally and, from a financial perspective, a lot more visibility and predictability," he said.
Allscripts' stock (MDRX) tumbled in early trading on Thursday, down some 17 percent to a share price of less than $9.
Wall Street watchers were taking a wait-and-see approach.
Piper Jaffray analysts Sean W. Wieland and Mohan A. Naidu wrote that Black "was the right, and obvious, choice," pointing to his two decades' experience in health IT.
"He was at Cerner in the dark days, and is familiar with what is needed to repair this company," they write. "A clean slate is needed to restore confidence among customers, although it may take more convincing to restore confidence among investors."
Still, they point to "a slow and painful process from here."
Allscripts has "nuggets of value," they write, "that can be harvested to get this company on its feet again," but in the meantime, the firm is "likely to see high attrition rates as the product strategy is rationalized, and revenue/earnings will likely lag expectations as they complete this multi-year process."
Black promised hard work and pleaded for patience as he tries to right the the listing ship. "I look forward to giving you a lot of good news, quarter after quarter, year after year," he told investors. "Bear with us as we batten down the hatches.
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