Orion Health meets forecast as it continues restructure

Andrew Ferrier, chairman of software company Orion Health. Photo / Brett Phibbs

Kiwi health software company Orion Health has posted its full year result at the lower end of its downgraded forecast, but says it is on track with restructuring plans.

For the financial year to March 31, the Group posted operating revenue of $170m - just in line with its forecasted $170m to $173m.

This was attributed to the timing of a major contract which was signed in the first week of April and so falls into the 2019 financial year.

Full year operating losses widened to $40.4m but the company said its second half of 2018 was the lowest half-yearly operating loss in four years at $15.4m.

Orion Health has been undergoing a strategic review and reorganisation, something chairman Andrew Ferrier said was tracking well.

Last month the business confirmed it was pursuing "potentially significant transactions" after media speculation the company was considering selling.

Ferrier today said he wouldn't comment "unless and until" a proposal reached sufficient certainty.

"We have continued to make really good progress executing on options that have come out of this strategic review," he said.

"Work on due diligence and structure is largely complete and we are going well with documentation, however until any final agreement is reached we can't give any certainty of the nature or terms of any transaction."

The company has been reviewing its business structure since last year with the aim of returning to profitability.

It had been focusing on global expansion over short-term earnings since listing in 2014.

Last month it announced a restructuring of the Group into three distinct divisions - Rhapsody, Population and Hospital.

Chief financial officer Mark Tisdel said the changes would significantly improve Orion's customer focus and speed of execution.

Founder and chief executive Ian McCrae said the company had removed $10m in costs over the financial year, and a further $30m as part of its restructuring.

Orion Health chief executive Ian McCrae. Photo / file

He said the company was well positioned for a solid 2019 year.

"Building a world-class product and a foundation of loyal customers in a complex sector, Orion Health has significant opportunity in a global market," McCrae said.

"It took 20 years to achieve $100 million in revenue and four subsequent years to double it.

"The resulting material growth in [research and development] and selling costs, which has impacted Orion Health's operating performance over the last few years is now abating, and we are well positioned for FY 2019 and beyond."

Recurring revenue now makes up 50 per cent of the company's operating revenue and it completed the year at a record high level of accounts receivable at $71m.

Tisdel said revenue pipeline, cost reduction, sale of surplus land and a renewed working capital facility of $20m from ASB would provide the company with sufficient liquidity to pursue its strategy in the upcoming period.