Authentidate Cutting Jobs

Authentidate Holding Corp.

, a provider of web-based software applications and telehealth products and services for healthcare organizations, announced today that the Department of Veterans Affairs (VA) has informed the company that it does not intend to exercise the fourth and final option year under its Care Coordination Home Telehealth Program contract for devices and services. The company's agreement with the VA, which was originally awarded in April 2011, consisted of a base year and four one-year option years that were exercisable at the VA's sole discretion. The current option year under the contract expires on May 15, 2015 and the company anticipates that it will complete its transition process with the VA by that date. Ian C. Bonnet, Authentidate's recently appointed Chief Executive Officer stated, "The VA contract contained no minimum purchase requirements and the company was never able to realize the level of growth and profitability anticipated from the VA relationship, despite its best efforts and the commitment of substantial resources. Although we are obviously disappointed with the VA's decision, the expiration of this contract will allow us to reduce our operating costs in excess of the average monthly recurring revenue and equipment margins previously generated from the VA project. This will allow us to repurpose our investments to focus on offering a broader array of solutions to the healthcare market than we already have available and to increase our sales efforts on the commercial market opportunities for our products and services, which we believe have greater potential." In response, the company will immediately implement plans to reduce its operating costs to better align its resources with its anticipated revenue over the next several quarters and the growth opportunities that it intends to pursue. These changes include a reduction in staff and the use of external resources and other costs. The company also expects to report significantly reduced revenues over the next several quarters due to the non-renewal of the VA contract. Mr. Bonnet concluded, "Authentidate has invested considerable time and significant resources developing state-of-the-art products and services, and we believe our proprietary software offers unique advantages to a healthcare industry that relies increasingly on technology to reduce costs, improve efficiencies and enhance patient outcomes. The VA has extensive requirements not necessary in commercial sectors. While some of those requirements have innovated our offerings, others are simply not value add to commercial customers. By no longer building legacy products to those specifications, we will be able to dedicate more resources to more meaningful efforts for our customers and shareholders, exploit the key advantages of our products and services and focus our product development and sales efforts on healthcare organizations with the greatest demand for telehealth and Inscrybe solutions. As part of this strategy we intend to pursue strategic relationships with industry partners to supplement our marketing efforts."