July 9, 2007

1. Mediware CEO Resigns

Facts and Background

James Burgess, president and CEO of Mediware Information Systems of Lenexa, KS announced he will step down by September 24. The company sells systems for blood bank, operating room, and medication management. Also announced: VP John Damgaard of the blood bank division, is promoted to a newly created SVP/COO position, effective immediately.

Opinion

The company’s institutional investors are losing patience with this industry laggard. Damgaard’s division was its only bright spot, so he gets his turn in the hot seat. Plus: decent earnings and a PE of just 25. Minus: a market cap of only $58 million, cost and transparency of being publicly traded, and a product line made up of mediocre specialty products when the market shows a vast preference for integrated offerings from Cerner, Epic, and Eclipsys. The stock down 40% from December 2005 in a healthy healthcare IT market. 

Musings

• Revolving door executive turnover continues.
• Forced customer upgrades have created revenue at the expense of goodwill.
• Going private might be an option.
• Prospects are bleak. 

2. Picis Pulls IPO

Facts and Background

Picis announced the day before the 4th of July holiday that it won’t IPO after all. The Wakefield, MA software vendor offers high-acuity systems for ED, surgery, and critical care.

Opinion

Surprising news from a company appearing to be doing well, especially since the market likes companies further along their lifecycle as Picis is. Still, they have a strong product line of systems for which customers are often willing to stray from best of breed.

Musings

News breaks long line of successful announcements.
Can company get to the next level without IPO cash?
Operations appear to be sound, although company has been in a quiet period.

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