Veradigm Shakes Up Board Amid Financial Reporting Challenges

Veradigm, the health IT vendor formerly known as Allscripts, has announced significant changes to its board of directors as part of an agreement with investor Kent Lake PR. This move comes in the wake of ongoing financial reporting issues and a recently concluded strategic review that failed to result in a sale of the company.

Board Restructuring and New Appointments

The company has expanded its board from five to six members, appointing two new independent directors: Vinit Asar, former CEO of orthotic and prosthetic firm Hanger, and Louis Silverman, CEO of telehealth company Hicuity Health. As part of the restructuring, several existing board members have stepped down or plan to resign, including Elizabeth Altman and Jonathan Judge. Chairman Greg Garrison is set to depart after the company files its annual report for the 2022 fiscal year or by July 1, whichever comes first.

Veradigm has also committed to finding two additional board members, subject to Kent Lake's approval. This restructuring is described as an "orderly refreshment of the Board" in an agreement with Kent Lake, which owns approximately 4.2% of the company's shares.

Financial Reporting Challenges and Nasdaq Delisting

The board shakeup follows a tumultuous period for Veradigm, marked by significant financial reporting challenges. The company has not filed a financial report since November 2022, after determining that several quarters of previous statements could not be relied upon due to "internal control failures."

These reporting issues led to Veradigm's delisting from the Nasdaq stock exchange about a year ago. The company has stated its intention to provide updated 2023 and preliminary 2024 unaudited financial ranges in mid-March, though a specific date for the release of its 2022 financial report remains unclear.

Strategic Review and Future Outlook

In May of last year, Veradigm initiated a strategic review to explore options for enhancing shareholder value, including a potential sale of the company. However, this process concluded in late January without finding a suitable deal. While five bidders submitted preliminary indications of interest, no final proposals were received.

Analysts from TD Cowen suggest that the conclusion of the review without a sale may indicate that the company felt the proposals undervalued Veradigm. The focus now appears to be on bringing financial reports up to date and potentially relisting on a stock exchange to create greater value for shareholders.

As Veradigm navigates these challenges, the healthcare industry will be watching closely to see how the new board composition and renewed focus on financial reporting will impact the company's future trajectory in the competitive health IT landscape.