Orion Health sets the price for its IPO

Orion Health is set to launch its long-awaited initial public offer (IPO) and list on the New Zealand and Australian stock exchanges at the end of November.

Orion Health is looking to raise between $NZ120 and $150 million in the offer, with the intention of boosting its research and development capabilities. It says it expects to form around 40 new R&D teams over the next two years, equivalent to over 300 people.

In its financial statement announcing the IPO, Orion Health said it was currently a loss-making business and does not expect to be profitable in the short term. It has operating revenue of $153m for the 2014 financial year.

It expects to offer over between 20 and 30 million shares at $4.30 to $5.70 a share. This would value it by market capitalisation at between $720 million and $915 million.

Orion says it plans to use the proceeds to continue to increase its R&D capacity with an emphasis on its Healthier Populations solution group. The company recently outlined its strategy to some of its user groups in Australia, announcing it had split the business into three solution groups called Intelligent Integration, Healthier Populations and Smarter Hospitals.

Intelligent Integration covers its existing health information exchange (HIE) business, which currently brings in much of its revenue in the US market.

Smarter Hospitals is the business segment it is most active in in New Zealand and Australia. The company describes Healthier Populations as the provision of care coordination, analytics and engagement tools for managing the healthcare needs beyond the walls of hospitals and into the community.

This is where it sees much of its future growth occurring, particularly in the US market. It recently signed agreements with two US insurers – Highmark, which is the ninth largest fund, and Blue Shield California, the 15th largest.

It plans to create new functionalities for these customers and create value through preventative strategies to keep people at home and healthy.

It lists its main competitors in the Healthier Populations segment in the US as InterSystems, Optum, AthenaHealth, Explorys, Medicity, Lumeris and DB Motion. Both Optum and Medicity are owned by insurers.

At the user group day, Orion Health founder and CEO Ian McCrae said he intended to expand the Smarter Hospitals segment and take on the big guys, including Epic, Cerner, CSC and InterSystems, along with local vendors.

Posted in New Zealand eHealth

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