Orion Health to raise $32 million, explore expressions of interest
- 30 May, 2017 08:07
After a challenging 2017, Orion Health CEO Ian McCrae is raising cash and exploring expressions of interest.
Orion Health's revenue declined in 2017 but cost cutting allowed the company to report a reduced $33 million loss for the year ended 31 March 2017.
The company, listed on both the NZX and ASX, is now raising cash and exploring unspecified expressions of interest it has received.
Describing the year as "challenging", Orion reported operating revenue of $199 million, 4% down from 2016 although up by 3% on a constant currency basis.
The operating loss of $33 million was a $22 million improvement from 2016. Orion's net loss after tax was $34 million.
Orion's net cash balance at 31 March was $6 million and it is seeking to raise another $32 million through a rights offer.
All eligible shareholders will be able to subscribe for new shares at $0.90 on a 2 for 9 basis under the offer. CEO and 50.8% shareholder Ian McCrae has committed to take up $15 million of shares in the offer and 9.6% shareholder GA Cumming, together with all New Zealand based directors, have committed to take up their full entitlements.
First NZ Capital is underwriting the balance of the offer.
Orion Health is also exploring expressions of interest it said it had received, focusing on ways to "maximize shareholder value and deliver outcomes that are in the best interests of all stakeholders".
Last month Orion told shareholders it had been in discussions with a parties over the previous quarter that could result in a partnership or minority investment.
"These discussions are preliminary and non-conclusive at this stage," it said.
The business has undertaken an organisational review which reduced annual costs by around $10 million, the company told investors today.
“Financial year 2018 is an important year for Orion Health as the business focuses on its drive to profitability during the second half of the financial year," McCrae said.
"The $32 million rights offer and the existing banking facilities together provide the business the financial resources to achieve that objective."
Orion signed new agreements in North America, including a significant contract with Saint Francis HealthCare Partners (SFHCP), a network of over 1,000 independent health care providers in Connecticut.
Orion Health is in the process of transitioning US customers to the cloud. The Saint Francis solution is hosted by Amazon Web Services (AWS) and will be delivered on a subscription basis.
Orion said it is committed to its partnership with AWS which will allow it to provide cloud-based services in all its major markets.
Performance in Europe, Middle East, Africa was affected by a slowdown in NHS tenders in the United Kingdom, the company said.
“I would like to take this opportunity to acknowledge that recent events have created a challenging time for our shareholders," McCrae said, "We have made, and will continue to make, appropriate changes to improve business performance.
"At the core of our business we have an impressive list of prestigious customers internationally, modern scalable technology and our staff are passionate and talented. Therefore I remain totally committed to the business and have supported the Rights Offer to the greatest extent I can.”