Orion Health warns strong kiwi weighing on revenue, cash position

Thursday 22nd September 2016

Orion Health, the health software developer, is still on track to return to profit in 2018, though the strength of the kiwi is crimping revenue in local currency terms and drained more cash than anticipated.

Chairman Andrew Ferrier told shareholders at the annual meeting in Auckland that the company's forecast for revenue growth of more than 20 percent in the year ending March 31, 2017 wouldn't be met because the New Zealand dollar had appreciated against a number of currencies, meaning Orion will get less when sales are converted back into local currency. That currency movement also weighed on Orion's cash position.

"The board remains of the view that we have sufficient funds and facilities to pursue our existing growth strategy," Ferrier said in notes published to the stock exchange. "We remain focused on driving to profitability and still believe we will reach profitability during FY18."

In May, Orion said it aims to return to profit in 2018 after forgoing short-term earnings when it listed in 2014 to expand its global operations and that its cash reserves were enough to fund that growth with some $8 million of annual savings expected from restructuring its US business.

The software developer's operating cash outflow of $32.3 million was smaller than the $38.5 million outflow in 2015, and Orion had cash and equivalents of $58.9 million as at March 31. Spending on research and development rose 26 percent to $63 million.

Ferrier today said steps to transition patient records to cloud-based applications and the US restructure put the company in a position to achieve profitable growth, and was pleased with improvements in R&D under newly defined lines of business.

Orion shares rose 2.5 percent to $3.69.

BusinessDesk.co.nz

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