Orion Health Announces FY2016 Annual Results
Performance highlights (all figures in NZD)
- Operating revenue $207m, comprising of 42% recurring revenue
- Driving to reach profitability during FY2018 with sufficient cash and facilities
- Increasing global footprint with software managing over 100 million patient records
- Launch of Amadeus precision medicine platform, enabling move of data to the cloud
Auckland, New Zealand - Orion Health Group Limited (OHE:NZX/ASX) today announced its full year results for the year ended 31 March 2016, achieving revenue growth of 26% to report operating revenue of $207m, up from $164m the previous year.
Orion Health CEO Ian McCrae says that FY2016 has been a year of progress for the company. Having invested in the development and launch of the Amadeus precision medicine platform the company is now driving to profitability during FY2018, and targeting revenue growth of over 20% in the coming financial year. With $59m of cash reserves Orion Health has sufficient cash and facilities to fund its growth strategy.
“We have launched our world-leading Amadeus precision medicine big data platform and we are now working to achieve profitable growth. We have recently made progress with several significant contracts including Cognizant recently securing its first sale under our partnership,” Mr McCrae says.
In FY2016 annualised recurring revenue grew 36% to $85m. Recurring revenue was 42% of operating revenue, compared with 33% in the previous year. The company is ahead of schedule in achieving its goal of exceeding 50% recurring revenue in the next four years.
The Operating Loss after Income Tax was $54m compared to $61m in the previous year. This includes an abnormal expense item of $7m resulting in an Operating Loss after Income Tax and before abnormal item of $47m, a $14m improvement on the previous year. This reflects the company’s business strategy of investing in Research and Development (R&D) and the cost of restructuring the business in the U.S. to ensure profitable future growth. In FY2016 R&D expenditure increased 26% to $63m, in line with revenue growth. R&D as a proportion of Operating Revenue remained flat at 30%. The company expects to realise $8m in on-going cost savings on an annualised basis as a result of reorganising the U.S. business.
The best performing region was EMEA (Europe, Middle East, Africa), recording an increase of 59% year-on-year to achieve operating revenue of $48m. Growth in this region was driven by a number of agreements signed with new and existing customers – including Boots UK Limited and the French Ministry of Health.
North America continues to be Orion Health’s largest region, with revenue of $125m, an increase of 32% on the previous year. Strong growth in Canada was driven by the deployment of the first electronic patient care plan in its largest region Ontario.
In the U.S. performance was mixed, however the year ended with the signing of two substantial agreements – a contract with Horizon Healthcare Services, Inc, a large insurer based in New Jersey with over 3.8 million members and the partnership with leading healthcare software vendor Cognizant. Cognizant have just secured the first sale under this partnership to a healthcare insurer with over 3 million members.
In APAC, revenue declined from $38m in FY2015 to $32m in FY2016. The primary reason for this was the sale of one-off perpetual licenses in New Zealand in 2015, which carried limited revenue forward into FY2016. After a period of consolidation in Australia, the company secured two exciting new contracts in Queensland, and revenue increased in Asia with successful deployments in Vietnam and a strategic new contract in Malaysia.
Mr McCrae says in the coming year revenue increases will be driven by global expansion, the shift to SaaS-based deployments, strategic partnerships and providing greater value for new and existing customers as they transition to the new cloud technology platform.
“Our software now manages over 100 million patient health records globally. This puts Orion Health in a powerful position as the health sector experiences major disruption through new technology and as patient records begin to move to the cloud,” Mr McCrae says.
“We are excited about our vision for delivering to our customers both today and in the future when precision medicine is enabling the perfect care for every health consumer.
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