Veradigm discloses internal control failures on revenue recognition, delays 10-K

Veradigm "announced that in conjunction with its year-end audit procedures it has 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 and its external auditors need to expand procedures and are filing with the SEC a Form 12b-25, extending the due date of the Company’s Form 10-K by 15 days, to allow for completion of those procedures. The internal control failures primarily stem from a software tool the Company implemented in the 3rd quarter of 2021 to assist it with compliance with FASB’s rule ASC 606. While extensive testing was conducted on the tool when implemented in 2021, testing during the current period highlighted some system generated duplicate transactions and other errors impacting the results the Company was receiving from the tool. The Company has engaged external advisory services to fully quantify the past impact, review system changes, and recommend compensating controls to prevent and detect similar potential errors in the future. While the work is not yet finalized, the Company estimates that the cumulative impact will be 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 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, but at this point no conclusion has been reached. The revenue adjustment will also impact reported Operating Income and Net Income from Continuing Operations for the respective periods, but at a lower dollar amount. The revenue adjustment will have no impact on reported cash flows from continuing operations for the respective periods."