Orion Health shares plunge below IPO price

Orion Health CEO Ian McCrae and COO Graeme Wilson. Photo / Jason Oxenham.

Orion Health shares have plunged below their initial public offer price to a record low after the software developer reported lower-than-expected revenue.

The Auckland-based company said that while third quarter customer receipts were traditionally slower, they fell short of expectations in the three months to December 31 as a result of slower contract closures and billings in North America.

Orion said this trend was expected to continue into the fourth quarter of the current financial year.

"In addition receipts from customers were adversely affected by the on-going planned transition from perpetual licences to subscription contracts," the firm said.

Orion shares recently traded at $5.60, almost 7 per cent below their opening price.

The company - whose technology facilitates the sharing of information between hospital departments, healthcare providers and health professionals - floated on the NZX on November 26. Shares in the IPO were issued at $5.70 a piece and closed at $6.27 after their first day of trading, valuing the company at more than $1 billion.

Orion said customer receipts in the three months to December 31 totalled $30 million, while net cash outflows came to $25.8 million.

Receipts from customers in nine months to December 31 were $121.5 million, with net cash outflows of $39.4 million.

The company, which raised $120 million in new capital through its IPO, had $96.5 million in cash at the end of the third quarter.

In a departure from common practice, Orion did not include any prospective financial information in its IPO prospectus, saying its inconsistent revenue - which comes via large contracts - made forecasting too difficult.