Orion Health has reported lower year-on-year sales for the half year ended 30 September and a $25 million loss, despite significant cost cutting.
Orion achieved operating revenue of $81 million for the half year, down 22 per cent, but says the decrease was in large part due to a significant software deal being recognised in 2017. This also had a disproportionate impact on margin, the company said.
This in turn was the main driver of an increased operating loss, $25 million, for the period compared with $16.5 million in the same period last year.
Orion Health hit strong headwinds in the second half of its 2017 financial year, but told shareholders it remained committed to reaching profitability during 2018.
That target still stands. Orion said today that based on its reduced revenue forecast and cost reduction programme, it expects to operate close to breakeven in the second half.
The company's share price lifted slightly on the news, up nearly two per cent to $1.07 in early afternoon trading.
The business also reported a 27 per cent reduction in monthly costs from $22.3 million in 2016 to $16.3 million in the second quarter of 2018 and a $15 million cost improvement compared with the first half of 2017.
Further efficiency savings are anticipated, with monthly costs for the year expected to be between $15 million and $16 million.
Meanwhile, recurring revenue as a percentage of operating revenue increased from 44 per cent to 47 per cent.
Orion said its commitment to accelerate the transition to a recurring revenue model was reflected in its ongoing migration to Amazon Web Services (AWS), which enabled the launch of "Rhapsody as a Service", its Rhapsody integration software delivered as a cloud service.
R&D expenses remained steady at $31 million.
Orion Health CEO Ian McCrae said “the result reflected a clear focus on managing costs, while at the same time delivering to the company’s global customer base."
"Orion Health continues to operate a globally significant business at the leading edge of healthcare software, technology and innovation," he added.
"The company will maintain its focus on careful management of revenue growth and cost structures to ensure we continue our drive to sustainable profitability."
The strategic review and possible fund-raising started in April 2017 "remains ongoing" and was expected to take additional time to evaluate alternatives.
At 30 September group cash was $16 million and working capital facilities $40 million, giving the company $56 million of available cash and banking facilities.