Orion shares continue to slide for second day

Orion chief executive Ian McCrae Photo / Jason Oxenham.

Orion Health's shares continued to fall sharply today after announcing on Monday that it was in talks with other parties who may take a stake in the company, and that it had failed to close some contracts by the end of its financial year.

In late trading today the stock was at $1.44, down 22c or 13.2 per cent from Monday's finish. The stock, which was worth more than $1 billion when it listed in 2014, has lost a quarter of its value since Friday, when it closed at $1.93 a share.

The healthcare software specialist's market capitalisation now stands at $228.8 million.

"The risk is that they need to raise more capital to support growth and they probably should," said one fund manager.

Orion said on Monday that it had failed to close a number of contracts before the end of its financial year to March 31, but that it still expected to move into profitability in the current financial year.

In a statement to the NZX, Orion said it was undertaking a strategic review that focused on maximising shareholder value.

"As part of this process the company has been in discussions with a number of parties over the past quarter that may result in a partnership or minority investment in the company," it said.

A number of brokers houses have changed their "fair value" recommendations for the stock, some as low as $1.30, after Monday's announcement.

Orion chief executive and majority shareholder Ian McCrae said operating revenue in the 12 months ended March 31 was probably between $194m and $200m, down from $207m a year earlier. The company's net loss was likely be between $32m and $38m, compared to a loss of $54.4m in 2016.

The company listed in November 2014 amid heightened investor interest in technology companies, but has since turned out to be one of the market's bigger disappointments. On debut, the stock traded at $6.50 a share, up from its $5.70 offer price.