Orion Health valued up to $915 mln in IPO, eyes late November listing

Tuesday 28th October 2014

Orion Health Group, which develops software systems for patient health management, wants to raise up to $150 million in an initial public offer which would value the firm at almost a billion dollars and give public investors up to 17.4 percent of the company.

The Auckland-based company plans to sell between 21.9 million and 29.1 million shares at $4.30 and $5.70 apiece, raising between $125 million and $155 million, the bulk of which will be new capital, according to its prospectus. That would value the company at between $720 million and $915 million by market value.

Alongside the new capital, chief executive and founder Ian McCrae is selling up to $5 million into the float. Existing shareholders are estimated to keep between 82.6 percent and 86.3 percent of Orion after the float.

The new funds will be used to accelerate the company’s research and development capacity for new opportunities in the management of patient healthcare, improve the implementation and delivery capability, and provide additional financial liquidity.

A final price is expected to be set on Nov. 7, with a dual-listing on the NZX and ASX scheduled for Nov. 26. The offer opens on Nov. 10 and closes on Nov. 21.

Orion’s revenue grew to $153 million in the year ended March 31 and while it has been profitable in the past, it’s not currently because it is reinvesting most of its cashflow back into global expansion.

The company is forecast to post a loss of $14.8 million in the six months ended Sept. 30, 2014 on sales of $80.5 million. Annualised recurring revenue, the favoured sales measure of software as a service firms, is expected to rise to $52.1 million in the first half of the 2015 year from $44.2 million as at March 31.

The software developer has reinvested most of its recent cashflow into new hires, with total staff numbers now at 1,100 worldwide. It has achieved high growth rates ranging between 25 percent and 30 percent for many years and has a revised target of hitting $1 billion revenue by 2020. Some 90 percent of revenue is derived offshore.

BusinessDesk.co.nz

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