Orion Health

[slingy]

Rhapsody business unit 75% has been sold for $205 million.
Share buy-back between 1.24 - 1.29
https://www.nzx.com/announcements/320296

[Sideshow Bob]

Market likes it - back over $1.00 for the first time since October last year.

[whatsup]

Although this is a fantastic agreement and somewhat expected it does not solve Orions underline problems that of the health industry's acceptance to its suits of health systems, imo the market will wait to see what can happen in the short term but Im thinking that there will be a softening in price unless they get big runs on the board.

[silverblizzard888]

Looks like the share price is slowly creeping upwards, some renewed confidence in the company. One thing that the latest financials haven't taken into account is that they reduced their staff count by 18% recently, which on a wage bill of $145million is about $26 million savings there alone, so I think there is a lot of confidence they can reach break-even.

I'm actually astounded to see Rhaspody business has a gross profit of $27 and its the Hospital business that is losing the majority of the funds.

For me the break down in value is that Rhapsody is worth $200 million as a business itself, while the hospital unit in its current state is possibly worth 100 million.

Assuming they can get to break-even this is a $300 million plus business. It has its risk, but the reward seems to outweigh the risk on this one.

I'm not going to call myself amazing, but I was pretty much on point.

[carrom74]

I'm not going to call myself amazing, but I was pretty much on point.

Have to admit... researched a bit of Orion after your comments.There was an element of reward outweighing risk.

Took a plunge and look now....Thank you for your analysis and yes you were pretty much to the point! especially the valuation of Rhapsody.

[silverblizzard888]

Have to admit... researched a bit of Orion after your comments.There was an element of reward outweighing risk.

Took a plunge and look now....Thank you for your analysis and yes you were pretty much to the point! especially the valuation of Rhapsody.

Thanks! I'm glad it work out well, and together we are laughing our way to the bank, thanks for the faith in what I said too. Nothing makes a investor happier than the day they made the right choice in the right investment and at the right time too!^^

[RupertBear]

I'm not going to call myself amazing, but I was pretty much on point.

You were definitely pretty much on point silverblizzard, well done!

Unfortunately I am not laughing my way to the bank having bought in before things really went to custard and stupidly holding on. I have learned not to do that anymore. Thankfully my big red arrow is now not so big and that makes me very happy. I will probably take up any buy back offer and run for the hills

[RupertBear]

Thanks! I'm glad it work out well, and together we are laughing our way to the bank, thanks for the faith in what I said too. Nothing makes a investor happier than the day they made the right choice in the right investment and at the right time too!^^

Would you buy in now silverblizzard or top up your holding? I am just wondering if my experience of holding at a loss for so long is why I want to jump ship asap. It may actually be worth holding onto now. Hmmm better go and do me some research!

[moimoi]

Not sure how fantastic this is..

So Hg buys Rhapsody for $205M. Take out $8M for "costs".

Then Orion uses that money to effectively buy back a 25% stake in Rhapsody for $28M and buy back / invest for a 75% stake in Population Health for $12M.

So the net investment into Orion is 205-8-28-12 = $157m.

With 200m shares on issue the net investment / cash available to "buyout" shareholders that choose to depart is equivalent to 78.5 cents a share (which a skeptic could say partially explains why Orion shares have been trading on the NZX @ around 75-80 cents for the last 4 months)

The "buyout" figure is improved by the fact that Mr McCrae is retaining 80% of his holding and evidently only selling / cancelling 20% or 19.5M of his 97.5M shares, thereby inflating the "buyback" figure for the others that choose to accept.

The unknowable is what value is the market going to ascribe to the loss making Population Health and Hospitals business(s).

Given that potentially a large portion of the remaining 102.5M (200M float less McRae 97.5M) shares may be cancelled as a result of the "buyback" then effectively Mr McCrae obtains a large increase in his level of ownership of Orion.

His shares are unlikely to be traded day to day, leading to a very limited free float of shares.

The potential result being an even more illiquid stock than what it is now.

IMO.

[golden city]

Can anyone work out what the profitability like next year without the profitable division