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Veradigm CEO & CFO Out Following Probe of Accounting Irregularities
Executive departures were announced after markets closed on a Friday but healthcare firm suggests resignations are unrelated to overstated revenue.
December 8, 2023
After markets closed on a Friday night Veradigm (MDRX), a healthcare technology firm, announced CEO Richard Poulton and CFO Leah Jones resigned at the request of the Board of Directors. The ousters follow an Audit Committee investigation into the company's financial reporting, internal controls over financial reporting and disclosure controls.
Poulton is getting $1.6 million to leave, as well as accelerated vesting of time based equity awards totaling more than $2.6 million at the current share price. Veradigm will also contribute $500,000 to various charities to which Poultan had promised donations.
In return, Veradigm revealed Poultan, among other things, has:
“...agreed to cooperate fully with the Company and its affiliates in the defense, prosecution or conduct of any claims or investigations relating to events or occurrences that transpired while Mr. Poulton was employed by the Company.”
Veradigm routinely does not file its financials on time.
Veradigm did not detail Poultan or Jones’ roles in the Audit Committee investigation that preceded their resignations.
A news release quoting Board Chair Greg Garrison, said only:
“Veradigm’s core business remains strong but, after careful review and consideration, it is clear that we must develop a stronger financial control environment with enhanced financial reporting policies and disclosure policies and procedures, and the leadership changes announced today reflect the importance of accountability in achieving that goal.”
Jones will stay on as a consultant and receive $10,000 per week plus a $100,000 “success fee” if she completes the initial six month term.
Director Shih-Yin Ho was appointed interim CEO and given a salary of $1.5 million. He will also be compensated for his service on the Veradigm board.
The Board of Directors has initiated a search process for a permanent CEO and CFO.
Veradigm also revealed the new leadership team is reviewing the fiscal year 2023 guidance previously issued on September 18, 2023.
Notably, the last line of the news release attached to the after hours filing suggests Veradigm overstated sales for two years which the company says is a separate matter from the Audit Committee investigation:
“In addition, the Company remains committed to regaining compliance with Nasdaq Listing Rule 5250(c) as soon as possible. Unrelated to the investigation and, as previously disclosed, the Company continues to estimate a reduction in revenue from continuing operations of approximately $20 million in the aggregate between the periods 2020 through the end of 2022 relating to certain revenue recognition practices.”
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