IT Brief New Zealand logo
Technology news for New Zealand's largest enterprises
Story image

Orion Health reports $61M full-year loss, beats prospectus on recurring revenue

By Pattrick Smellie
Tue 26 May 2015
FYI, this story is more than a year old

Orion Health, the healthcare system software developer, reported a $60.8 million loss for the year to March 31, in line with its strategy to grow revenues before becoming profitable, and beat its prospectus forecast for annualised revenue growth.

The result was the first announced to the NZX since Orion's listing on the NZX on Nov. 26, in a $125 million capital-raising to assist the 22-year-old company to grow in global markets. Today's full financial statements follow a quarterly cash-flow report in late April that reported the company's annual revenues rose 7 percent to $164.1 million.

The loss includes writing off $10.1 million in deferred tax previously held on the company's balance sheet, and compares with a $1.1 million loss in the previous financial year, with the difference driven primarily by a 34 percent increase in operating expenses to $221.2 million.  That reflected a 42 percent increase in spending on research and development, which totaled $48.7 million for the year, with staff numbers in that area increasing from 363 to 461.

The other big contributor to rising costs was general and administration expenses, up 30 percent to $46.4 million, reflecting a combination of exchange losses, increased people and security costs, and the opening of new offices.

On one of its most important metrics, growth in recurring revenue, Orion achieved 21 percent growth to a $53.7 million, slightly ahead of its pre-float prospectus forecast of $52.1 million.

The Orion share price fell 0.2 percent in early trading on the NZX to $4.84, having listed at $5.70 and stagged on listing to $6.27.  They have traded to a low since listing of $4.35 twice this month.

The prospectus gave no prospective forward financial information beyond annualised revenue, and the company told investors that was because "recurring revenues currently represent less than one third of operating revenue and there is inherent uncertainty around the capture of customer contracts and the timing of their execution, and recognition of the associated revenues."

Recurring revenues are rising as the company moves to a subscription model for its products and away from one-time payment perpetual licences.  Non-recurring revenues grew 2.2 percent in the year to $110.3 million. However, the company is targeting more than half its income to come from recurring subscription payments within five years.  The company said it had one major recurring revenue win in the US market during the year, with the signing of Cal INDEX, a large healthcare administrator.

However, the US market was otherwise a drag on earnings, with revenues dropping 81 percent to $95 million, reflecting the move away from perpetual licences. A 24 percent increase in recurring revenue to $24.1 million helped offset the fall, but the US health sector was also undergoing regulatory changes, which also affected the US result. North American revenues fell from 66 percent of total group sales to 58 percent in the 2015 financial year.

The next largest market was Asia-Pacific, at $38 million, or 23 percent of sales, including New Zealand and Australia, followed by Britain, Ireland and the rest of the world at $30 million, or 19 percent of revenue.

Britain and New Zealand were "stand-out performers", delivering revenue growth of 60 percent and 23 percent respectively, the company said in a statement. Chief executive Ian McRae said the company was "especially delighted with the growth we have enjoyed in the United Kingdom with a good run of contracting activity with National Health Service Trusts and clinical commissioning groups."

"The changing US environment did cause a slowdown in contracting activity in the latter part of the financial year and we expect some volatility to continue as the market continues to adopt population health management solutions," said McCrae. "Transitions that are driven by new regulatory change traditionally create significant opportunities for companies like Orion Health, even if the timing of those opportunities is sometimes uncertain."

The Cal INDEX contract was significant because it was an example of the emerging model for "health insurers, or payers" in the US market, with a move away from fee-for-service models to "focusing on value-based outcomes."  

Presentation slides included with today's results show the company experienced significant margin reductions in two of its three reported operating segments. Margins for implementation services, worth $71.5 million in the latest financial year, fell to 13 percent, from $60.9 million, or 30 percent, in the prior year. The margin on managed services, totalling $30.5 million, fell to 10 percent from 26 percent.

Support services margins, worth $23.2 million in revenue, rose to 84 percent from 81 percent. The decline in implementation services margin entirely reflected US market performance.

The company gained "a significant number of large-scale US customers" in the 2014 financial year and the "challenge of scaling implementation capability adversely impacted margin" in the year just ended, with margins expected to improve this year.

“The fact remains that the health information technology market is huge, estimated to be worth nearly US$57 billion by 2017," said McRae. "Globally we are seeing a preference shift towards population health management solutions and we believe Orion Health is the only vendor taking a scalable whole-of-platform approach to market. We have significant experience in the key market segments of big data, disease management and care coordination, all of which are expected to grow at faster rates than the rest of the health infotech sector."

The company was "well-funded for continuing growth", with $95 million in cash, cash equivalents and term deposits held at balance date.

Related stories
Top stories
Story image
Artificial Intelligence
Is your chatbot bringing down the customer satisfaction score?
The top 10 reasons why chatbots are failing to meet customer expectations and what you must do to avoid that.
Story image
Tech job moves
Tech job moves - Fastly, INX, Kinly, SmartBear & Vectra AI
We round up all job appointments from July 29 - August 12, 2022, in one place to keep you updated with the latest from across the tech industries.
Story image
How well do rangatahi understand cyber safety in Aotearoa?
Do rangatahi in Aotearoa understand the importance of being safe online, or has lifelong exposure to the internet resulted in widespread complacency?
Story image
Data Protection
Advancing genomic sequencing and public health with digital infrastructures 
Right before our eyes, we've witnessed the development of the COVID-19 vaccine in record time. An enormous achievement in an otherwise lengthy task that previously took, on average, 10-15 years.
Story image
Data analytics
Pressure on orgs to up their data analytics game - study
A recent report from Sisense highlights data transmission, analysis, and risk management remain top concerns for data professionals in APAC.
Story image
Artificial Intelligence
Gartner unveils key emerging tech to watch in 2022
"Such technologies present greater risks for deployment, but potentially greater benefits for early adopters," says Gartner.
Story image
Why printing security plays a vital part in keeping Aotearoa safe
While internet printing, mobile printing and other similar technologies have no doubt made things easier to manage, it has also brought a whole new set of problems to the table.
Story image
New Zealand cloud provider challenges Google's claims on data control for region
A Wellington cloud services provider says Google's claim it will offer New Zealanders complete control over their own data is not true.
Story image
Artificial Intelligence
Exclusive: NZ-based DEFEND offers global cyber protection
DEFEND supports customers in 66 countries across the globe with a relentless focus on ensuring that every dollar spent on security provides a meaningful return on investment and reduces cyber risk.
Story image
Palo Alto Networks responds to rise in threats with MDR service
Unit 42 Managed Detection and Response is a new service that can offer continuous 24/7 threat detection, investigation and response.
Story image
Avast One extends protection with Online Safety Score
Avast One has extended its cross-platform support by adding its Online Safety Score feature to both the Mac and iOS platforms of Avast One.
Story image
Ingram Micro
Ingram Micro NZ sees $74 million revenue growth in 2021
Ingram Micro New Zealand's latest financial report reveals that its revenue from contracts with customers increased by almost $74 million in 2021.
Story image
IBM expands Power10 server line for business modernisation
IBM has recently announced a significant expansion of its Power10 server line with the introduction of mid-range and scale-out systems.
Story image
Gartner Magic Quadrant
Gartner names Lookout a Visionary in 2022 Magic Quadrant
Gartner has recognised Lookout as a Visionary in the 2022 Magic Quadrant for Security Service Edge (SSE) and one of the top three offerings in the 2022 Gartner Critical Capabilities for SSE report.
Story image
Data Protection
VMware introduces advanced workload protection for AWS
VMware Carbon Black Workload for AWS delivers comprehensive visibility and security across on-premises and cloud environments for AWS customers.
Story image
Latest VMware threat report reveals truth about deepfakes
"Cyber criminals have evolved. Their new goal is to use deepfake technology to compromise organisations and gain access to their environment."
AWS Marketplace
Learn how security orchestration, automation, and response (SOAR) enhances your security strategy.
Link image
Story image
Why security needs to shape your journey to the cloud
It's estimated that 80% of workloads could be in the cloud in the next few years. How can you make all that data secure?
Story image
Education sector seeing highest volumes of cyber attacks
When breaking down the numbers to education attacks by region in July 2022, A/NZ was the most heavily attacked.
Story image
Datacom research explores reality of zero trust in A/NZ
Zero trust is fast emerging as global best practice in cybersecurity and local leaders are on board, with 83% considering it essential to security.
Story image
Dark web
Beware the darkverse and its cyber-physical threats
A darkverse of criminality hidden from law enforcement could quickly evolve to fuel a new industry of metaverse-related cybercrime.
Story image
Exclusive: The Access Group shares the benefits of embracing SaaS
In today's rapidly changing working environments, efficiency and productivity are surefire ways to create business growth and success.
Story image
Data analytics
Data analytics a struggle for A/NZ healthcare organisations
A study by InterSystems has found that most Australian and New Zealand healthcare organisations struggle to use data analytics to support their business objectives.
Story image
Garmin expands NZ footprint with new Auckland distribution centre
The facility at Goodman’s Highbrook Business Park will be fully operational from October 2022 and features 3,586sqm of warehouse space.
Story image
High level of Customer Identity & Access Management adoption
The study from Okta revealed that the pandemic has either accelerated or highlighted the need for digital-first strategies.
Story image
Why enhancing bot protection for web and API endpoints matters
The trouble with bots is that they aren’t all bad. Unfortunately, this can make it challenging to detect malicious bots that find their way into your system and threaten your business.
Story image
Application Performance Monitoring / APM
New Relic integrates offering with Atlassian’s Jira Software
New Relic has integrated errors inbox with Jira Software to allow developers to easily access and set up complete stack error tracking and software performance monitoring from within the tool.
Story image
Cyber attacks
Dramatic uptick in threat activity with exploits growing nearly 150%
"While it’s not a surprise given increased attack opportunities like remote work, it’s still a worrying development and one we cannot ignore."
Story image
Cloud and data protection big challenges for NZ businesses
"This surge towards a cloud-first approach meant security and safety became afterthoughts - there's no point being the fastest car on the racetrack if you crash.”
Story image
Dicker Data
Dicker Data brought on as Acronis partner for A/NZ
The news about the partnership comes in as cyber criminals continue to exploit gaps in traditional solutions and strategies in NZ and across the APAC region.
Story image
Snyk announces plans to expand partner network in APJ
Recognising that partnerships are critical for growth, Snyk is building an entire partner ecosystem that will drive its expansion across APJ.
Story image
NZ program recovers and recycles more than 177 tonnes of e-waste
The TechCollect NZ pilot program says its milestone of recovering and recycling more than 177 tonnes of ICT e-waste recognises the efforts of many.
Story image
Organisations exposing highly sensitive protocols to public internet
More than 60% of organisations expose remote control protocol SSH to the public internet, while 36% of organisations expose the insecure FTP protocol.
Story image
SnapLogic teams up with meetmagic for charity and children
SnapLogic has announced its partnership with meetmagic, an online Australian platform that combines business and philanthropy.
Story image
Google Cloud
Google Cloud to open first cloud region in NZ - among others
Google Cloud has announced plans to bring three new cloud regions, one each in New Zealand, Malaysia and Thailand.
Story image
Hybrid Cloud
The essential guide to digital transformation by SolarWinds
Digital transformation is a buzzword thrown around all the time by companies, but what does it actually mean and why is it important? SolarWinds breaks it down.
Story image
Privileged Access Management / PAM
The importance of stopping identity sprawl for cybersecurity
The 2021 Data Breach Investigations Report (DBIR) shows that 61% of all breaches involve malicious actors gaining unauthorised, privileged access to data by using a compromised credential. Unfortunately, it is often too late when the misuse of a credential is detected.
Story image
Red Hat
Red Hat announces 2022 awards winners for A/NZ region
Red Hat recently acknowledged Australia and New Zealand partners with its annual awards, highlighting partners across various categories.
Story image
Augmented Reality
TeamViewer remote access software integrated into RealWear Cloud
TeamViewer has announced a major expansion of its partnership with RealWear, a leading provider of assisted reality wearable solutions for frontline industrial workers. 
Story image
Ministry will no longer accept equipment from Chinese firm Hikvision
The Ministry of Business, Innovation and Employment (MBIE) says it will no longer accept equipment from a major Chinese surveillance camera maker.
Story image
Enterprise Resource Planning / ERP
Why the right ERP (and partner) is crucial to an innovative and successful business
Enterprise Resource Planning (ERP) is a foundational step to ensuring a robust business model; here's why choosing the right one could be vital to ensuring long-term success and innovative results.