Orion Health set to list on NZX Main Board and ASX

MEDIA RELEASE - 28 October 2014

Orion Health set to list on NZX Main Board and ASX

Global healthcare software provider Orion Health Group Limited (Orion Health) has today registered a prospectus, under which it is looking to raise between $120 million and $150 million through the issue of new ordinary shares and under which interests associated with Orion Health founder, Ian McCrae, are looking to sell up to $5 million of shares (the Offer).

Established 21 years ago, Orion Health has enjoyed sustained growth and increasing recurring revenues from delivering healthcare IT solutions to governments, hospitals and healthcare providers with more than 450 customers in 25 countries.

Orion Health Chairman, Andrew Ferrier, says there is a growing awareness of the huge potential to deliver better health outcomes for patients and more effective and efficient systems for those that provide and pay for healthcare through the intelligent use of health data.

“The health industry is undergoing a transformational change and Orion Health is positioned in a ‘sweet spot’ with software solutions proven over the last 10 years to deliver meaningful benefits for all stakeholders, including healthcare funders, providers and the individuals receiving care. While our traditional software business continues to grow, a new category of customers, US health insurers (payers), are now keen to investigate software solutions like ours to help tackle the unsustainable costs of healthcare at the same time as individuals are demanding greater control over their own health."

The new capital raised will enable New Zealand-headquartered Orion Health to continue increasing its research and development capacity, improve its implementation and service delivery capability for customers and provide additional financial liquidity.

On completion of the IPO and immediately before listing, Orion Health founder and CEO Ian McCrae is expected to retain ownership of around half of the company. No other shareholders are selling into the IPO.

Mr McCrae says the IPO and sharemarket listing is another milestone in Orion Health’s proud 21 year history. In the last 10 years Orion Health has achieved a compound average annual growth rate in operating revenue of 26% to achieve operating revenue of $153 million for the 2014 financial year ended in March.

“We believe the “health data revolution” will have a profound impact on the healthcare industry.

Biometric information, genomics and the internet will create an explosion of information and the application of IT to that information will change the way healthcare is delivered and the way consumers interact with providers and payers. Healthcare is yet to experience the online transformation seen in other industries. I believe it will inevitably go through this transformation and the impact will be similar to the way search engines transformed use of the internet.” Ian McCrae says.

The global health care information technology (HCIT) market is forecast to grow from US$40.4 billion in 2012 to US$56.8 billion by 2017. [“Healthcare IT Market - Global Forecasts to 2017”, Markets and Markets, May 2013.] The United States represents the largest share of this market at US$15.9 billion in 2012 and this is forecast to grow to US$22.6 billion by 2017.[“Healthcare IT Market - Global Forecasts to 2017”, Markets and Markets, May 2013.] The United States is Orion Health’s largest market, generating 58% of operating revenue in financial year 2014.

“Healthcare costs are rising to unsustainable levels, driven by a huge amount of waste and the ageing population, making payers, including governments, and healthcare providers interested in using digitisation to drive greater efficiencies and improve health outcomes” Ian McCrae says.

In the US, health spending accounts for 18% of GDP while OECD countries spent an average of 13% of GDP on healthcare in 2012.[Total Health Expenditure (% of GDP), World Development Indicators, The World Bank.] An estimated US$910 billion of healthcare expenditure was wasted in the United States in 2011.[“Eliminating Waste in US Health Care”, Donald M Berwick & Andrew D Hackbarth, The Journal of the American Medical Association, April 2012.] Reducing even a small proportion of that wastage offers significant savings and a huge opportunity for Orion Health.

Orion Health has customers in 25 countries around the world including New Zealand, Australia, the United States, Canada, Great Britain, Northern Ireland, Europe and Asia, across its Intelligent Integration, Smarter Hospitals and Healthier Populations solution groups.

Orion Health’s Healthier Populations solution is already its largest revenue centre generating around half its operating revenue. It is used globally by governments and other healthcare funders, as well as healthcare providers, and has been recognised as a leading solution.

Smarter Hospitals is a fast growing solution for Orion Health, connecting clinical information into a single viewer within a hospital and enabling automation of a hospital.

Intelligent Integration is the core element on which Orion Health was founded. Its best of breed Rhapsody integration engine rapidly and reliably connects, integrates and shares information between disparate health software systems and organisations.

The Offer to subscribe for between $120 million and $150 million of new ordinary shares and $5 million of existing shares will be made to retail clients of NZX Firms and institutional investors in New Zealand, Australia and certain other jurisdictions. There will be no public pool.

An indicative price range has been set at $4.30 to $5.70 per share. Based on the indicative price range, the company’s market capitalisation immediately prior to listing will be between $600 million and $795 million. The final offer price and number of new shares to be issued will be established through a bookbuild process to be conducted on 6/7November 2014 by the Joint Lead Managers for the Offer, Deutsche Craigs and First NZ Capital. Orion Health is expected to list on the NZX Main Board and ASX on 26 November 2014 under the stock code OHE.

There will be no public pool for the Offer so interested parties should contact the Joint Lead Managers or an NZX Adviser for a copy of the investment statement for the Offer. The prospectus and investment statement will also be available at www.orionhealthshares.com.

Contact information for the Joint Lead Managers is as follows:

Deutsche Craigs 0800 226 263
First NZ Capital 0800 822 022

Key dates*
Prospectus and Investment Statement registered [28 October 2014]
Offer price announced 7 November 2014

Retail Offer opens 10 November 2014
Retail Offer closes 21 November 2014
Allotment 25 November 2014

Expected start of trading on NZX Main Board and ASX 26 November 2014

*The key dates are indicative only and may be amended.

Orion Health has applied to NZX Limited for permission to quote Orion Health’s ordinary shares on the NZX Main Board. Quotation is subject to approval by NZX and NZX accepts no responsibility for any statement made in this announcement. The NZX Main Board is a registered market operated by NZX Limited, a registered exchange under the Securities Markets Act 1988. Orion Health intends to apply to ASX Limited for permission to quote Orion Health’s ordinary shares on the ASX. Quotation is subject to approval by ASX and ASX accepts no responsibility for any statement made in this announcement. ASX is not a registered exchange under the Securities Markets Act 1988.

ENDS

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