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Orion Health inks deal with Nasdaq's Cognizant to triple patient reach

Friday 26th February 2016

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Orion Health Group's deal to provide its Amadeus platform to Nasdaq-listed Cognizant Group has the potential to triple the number of patients it reaches, boosting a metric it says is increasingly used to value businesses in the healthcare sector.



The Auckland-based company didn't put a value on the agreement but said it gave Orion access to 190 million patients. Currently, Orion software manages more than 90 million patient health records worldwide, including 44 million in the US, amounting to about 14 percent of the US population. Its target is to get to 20 percent.



Orion chief executive Ian McCrae points to the US$2.6 billion acquisition by IBM's Watson Health Cloud of Truven Health Analytics, yielding 215 million patient profiles or a valuation equivalent to US$12 a patient. That deal is part of a global "land grab" for patients as the health-care industry makes better use of data and analytics to improve outcomes at the lowest possible cost.



"The reason patient numbers are important is because this is increasingly how businesses in the healthcare sector like us are valued," McCrae said.



Orion shares jumped 12 percent from a record low to $2.80. The stock has tumbled 55 percent since listing in 2014 after raising $120 million of new capital in an initial public offering at $5.70 apiece.



In November last year, Orion posted a wider first-half loss of $26.9 million, which it said was in line with expectations, while a weaker kiwi dollar and recurring revenue in North America lifted sales by 26 percent to $101.7 million. Orion is forgoing short-term profits in a bid to build a global business of scale. As part of that strategy, the company is trying to shift more revenue into recurring sales rather than the traditional perpetual licences it has previously sold.



McCrae said the company "tries not to follow our share price", adding that the tech sector generally has been weaker.



"We're on track and have no plans to raise more capital," he said.



Orion was likely to release more detailed figures about its performance shortly, he said. The company had cash and equivalents of NZ$77 million as at Sept. 30, reporting an operational cash outflow of $19.4 million in the half, up from $13.6 million a year earlier.




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