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On February 28, 2023, Veradigm disclosed that it “detected certain internal control failures related to revenue recognition that have occurred over the prior six quarters, resulting in a mis-statement to reported revenues during those periods.” As a result, the Company reported that it expects “a reduction in revenue from continuing operations of approximately $20 million dollars in the aggregate from what it otherwise reported since the 3rd quarter of 2021 and expected to report for the 4th quarter of 2022.” The Company added that it is “continuing to evaluate the materiality of the mis-statement to determine if the full amount of this adjustment will flow through in the 4th quarter of 2022 or if prior periods will also require adjustment.” As a result, Veradigm revised its 2023 guidance downward and announced that it would not be filing its 2022 annual report on time.
On this news, Veradigm’s share price fell $2.12, or 12.8%, to close at $14.49 per share on March 1, 2023, thereby injuring investors.
Then, on March 22, 2023, Veradigm disclosed that it was expanding its “transaction testing and time periods to which they are being applied” to “ensure that any prior errors are fully quantified and corrected.” The Company further disclosed that the cumulative impact of its corrections “will increase to approximately $40 million” and that “the impact for 2021 will require a restatement of the Company’s financial statements as of and for the year ended December 31, 2021.” The Company also decreased its 2023 revenue guidance.
On this news, Veradigm’s stock price fell $0.39, or 2.9%, to close at $12.98 per share on March 22, 2023, thereby injuring investors further.