OHE
26/05/2015 08:30
FLLYR
PRICE SENSITIVE
REL: 0830 HRS Orion Health Group Limited
FLLYR: OHE: Orion Health FY15 Annual Report and Results Announcement
MARKET RELEASE
26 May 2015
Release: Immediate
(Note: all currency is in New Zealand dollars unless otherwise stated)
Orion Health Announces FY2015 Annual Results
Orion Health Limited (OHE: NZX/ASX) today announced its full year results for
the financial year ended 31 March 2015, reporting revenue growth and a
pleasing increase in its recurring revenue base.
The company's Operating Revenue for the year was $164m, up 7% from $153m in
FY2014.
The company has grown its Annualised Recurring Revenue base significantly,
from $44m at 31 March 2014 to $63m at 31 March 2015, an increase of 42%. An
important contributor to this growth was the successful implementation of the
Orion Health Open Platform for the company's first large strategic Health
Insurance (Payer) customer in the United States, Cal INDEX.
All regions experienced growth in FY2015 other than North America, with the
company's businesses in the United Kingdom and New Zealand being standout
performers, delivering 60% and 23% revenue growth respectively.
In the United States revenue growth was impacted by two factors:
First, the market is evolving under a changing regulatory environment that
has seen the Payers emerge as market leaders and Orion Health has been
successful securing three strategic Payer customers. This change did however
result in some volatility in contract closures in the latter part of the
year.
Second, the company is transitioning its business model from perpetual
licences to subscription revenue. Revenue derived from perpetual licences for
Orion Health's Healthier Populations solution group dropped 81% year on year,
only partially offset by a 35% rise in Managed Services revenue as newly
acquired customers completed implementations and moved to a live production
state. The transition to subscription revenue in Orion Health's U.S.
Population Health Management (PHM) business is now largely complete and the
company expects to build on its recurring revenue base with new contracting
success in FY2016.
Total FY2015 Loss before Income Tax was $51m, largely reflecting the
company's strategy to increase investment in new product development as well
as building its service delivery capacity to meet customer demand. The Loss
after Tax for the year was $61m and reflects the removal of $7m of deferred
tax assets from the company's Balance Sheet.
During FY2015, Orion Health grew its Research & Development (R&D) resource
from 363 people to 461 people, bringing its total R&D spend to $49m for the
year. This provided the company with the impetus to increase its development
efforts across all of its solution groups. In particular, the company
delivered new generation products in its Healthier Populations solution group
in order to meet the expectations of customers and progress its global vision
to deliver an end-to-end solution for PHM.
Orion Health has grown from a company of fewer than 450 people to one of
1,226 in just over four years. To assist with the management of such swift
growth, the Board has enhanced the company's leadership capability, and in
August 2014 welcomed leadership expert Dr Lester Levy as a Director. The
Board was also very pleased with the appointments of Graeme Wilson as Chief
Operating Officer and Gary White as Global Services Leader during 2014.
Comment from CEO, Ian McCrae
"FY2015 has been a challenging year for Orion Health in many respects, but at
the same time we have achieved several strategic milestones and have
uncovered immense opportunity. We successfully completed a $125m Initial
Public Offering to position us to take full advantage of the emerging
opportunities we see globally.
"The U.S. market is transitioning to Population Health Management under an
evolving regulatory framework, driving the market from fee-for-service to
focusing on value based outcomes. Some government incentive programmes in the
U.S. have started to taper off and we are seeing the emergence of new
opportunities. In particular, we identified the early ascendancy of the
Health Insurers, or Payers, and
successfully implemented our first large strategic Payer customer Cal INDEX.
This is garnering significant attention and we fully expect other Payers to
look to the Cal INDEX model moving forward.
"The changing U.S. environment did cause a slowdown in contracting activity
in the latter part of the financial year and we expect some volatility to
continue as the market continues to adopt PHM solutions. Transitions that are
driven by new regulatory change traditionally create significant
opportunities for companies like Orion Health, even if the timing of those
opportunities is sometimes uncertain.
"Over the course of the financial year we also transitioned our Healthier
Populations business model in the U.S. from perpetual licences to
subscription revenues. This contributed to a decrease in revenue derived from
perpetual licences, which was only partially offset by the increase in
Managed Services revenue for newly acquired customers on a subscription
model. This transition is now largely complete and we look forward to
building on our recurring revenue base with new contracting success moving
forward.
"Outside of North America, all our regions performed well in FY2015 and we
continue to see positive market activity. We are especially delighted with
the growth we have enjoyed in the United Kingdom with a good run of
contracting activity with National Health Service Trusts and Clinical
Commissioning Groups.
"We upscaled our R&D capacity in FY2015 to enable us to invest further in new
product development and were extremely happy with the launch of new versions
of our software solutions at the HIMSS global healthcare IT conference in
April.
"The fact remains that the health information technology market is huge,
estimated to be worth nearly US$57 billion by 2017. Globally we are seeing a
preference shift towards PHM solutions and we believe Orion Health is the
only vendor taking a scalable whole of platform approach to market. We have
significant experience in the key market segments of big data, disease
management and care coordination, all of which are expected to grow at faster
rates than the rest of the health infotech sector.
"We have been recognised by industry analysts as a technology leader and know
that we have the right strategy to capitalise on the vast and wide ranging
opportunities in front of us. The challenge for us now, as a leadership team,
is to ensure Orion Health lives up to its potential."
ENDS.
Documents released today related to FY2015 Results:
o Media release
o Annual Report FY2015
o Annual Results FY2015 Presentation
o Notice of full year results conference call at 11am today
o Results announcement appendix
o ASX appendix 4G - Corporate Governance Statement
Investor calendar (NZT)
26 May 2015 - Annual Report Released, Annual Results Presentation conference
call at 11am
15 July 2015 - Annual General Meeting (Auckland, New Zealand)
End July 2015 - Q1 FY2016 business update
Late November - Interim Results announced
For more information contact:
Bridget Snelling
Investor Relations Manager, Orion Health
+64 21 414 214
Phil McCracken
Corporate Marketing Manager, Orion Health
+64 21 136 8065
Luke Facer
VP, General Counsel and Company Secretary
+64 9 630 0600
End CA:00264781 For:OHE Type:FLLYR Time:2015-05-26 08:30:04
