Orion Health

[oldmate]

I am interested in this float, does anyone know if they have engaged a broker to help with the sale and if so who.

[dingoNZ]

I am interested in this float, does anyone know if they have engaged a broker to help with the sale and if so who.

There will be huge interest with Orion Health, has the float been confirmed yet? I've only seen it rumored.

[dingoNZ]

Seeking a possible valuation of $500m, possibly later this year. I imagine interest for this will be huge!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11277633

[clip]

Not big on IPO's / not brave enough to stag but have been watching orion for the last couple of years hoping they would list, we see a lot of their software/influence through work (I.T company who specialize/do a lot of work for gp's and healthcare providers)

[Zaphod]

Not big on IPO's / not brave enough to stag but have been watching orion for the last couple of years hoping they would list, we see a lot of their software/influence through work (I.T company who specialize/do a lot of work for gp's and healthcare providers)

What are your general thoughts on the software that comes from Orion? Speaking with some colleagues at the DHB reveals mixed reviews, mostly surrounding buggy code and very slow improvement cycles.

I don't work in the healthcare sector, so I don't have any information to provide balance to their claims.

[Snow Leopard]

I found this article from today's NZHerald (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11287963) on Orion interesting, primarily because I worked on this sort of stuff (a digitized patient medical history) 20 years ago.

The main issue then was the [lack of] electronic communication between medical providers (GP, specialists, hospitals, pharmacies) so it used a smart-card which the patient carried round with them (for immediacy) with interesting methods of distributing and archiving patient data.
It worked surprisingly well on a fairly wide scale field test, but got canned soon after for reasons that were nothing to do with the project itself.

So I am surprised and yet not surprised that it is still an issue.

I look forward to any IPO documentation with interest.

Best Wishes
Paper Tiger

[clip]

Are you able to divulge any further details about why it got canned?
(Not really relevant to orion, just for my own curiosity's sake :) )

[Snow Leopard]

Should have mentioned that this was not in NZ.
Who is to know the true reason?
Whilst it was generally regarded as good, no one seemed to want to invest the necessary to take it onwards.

Best Wishes
Paper Tiger

[Longhaul]

From the NBR today, Orion has engaged PR firm Senescall Akers who specialise in IPOs.

Had better start saving my pennies in earnest!

[GoldenStag]

Anyone heard any more about this potential float? Seems to have gone quiet for a bit...

[dingoNZ]

Wait until later in the year, we should hear something by late October

[Harvey Specter]

Anyone heard any more about this potential float? Seems to have gone quiet for a bit...I think I read that most that are looking to IPO will wait till after the election and everything has stabled down as you dont want to float during volatile periods. So expect them to be November-ish.

[Arbitrage]

The Orion Health AGM is on 16 September. This may give some indication.

[blackpixiez]

The Orion Health AGM is on 16 September. This may give some indication.

Ex-Fonterra boss Andrew Ferrier has been appointed chairman: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11325685

[Harvey Specter]

The Orion Health AGM is on 16 September. This may give some indication.Anybody go?

[sharp]

https://www.orionhealth.com/201410032436/new-zealand/legal-counsel-auckland



Demonstrate a good understanding of the New Zealand Companies Act, Securities Act and Listing Rules (required).



Suffice to say IPO is all go.

[Arbitrage]

There is a special meeting on 17 October to approve the issue of new shares in anticipation of an IPO.

[sharp]

There is a special meeting on 17 October to approve the issue of new shares in anticipation of an IPO.

Anymore specifics?

[percy]

The Sunday Star Times had an article on the IPO.The lead brokers are First Capital NZ and Craigs.
Further details are not far away,[this week or next ]with listing expected before Christmas.

[GoldenStag]

I saw an article in NBR and on scoop attempting to draw a comparison between Orion and Xero.

I speculate that this was Orion's PR company in the background orchestrating the article somehow to try and link Orion to high valuation multiples.

I certainly hope they don't get greedy with this one. I view Orion as more like Gentrak with large customer revenue lumps. GTK also listed well and weren't too greedy with the IPO price.

(Gtk order debacle excepted of course)

[Harvey Specter]

There revenues are ~$150 so twice XRO but growth this year will be lucky to be 30% so much less than XRO. Growth the most important if it can be maintained.

[kiora]

The difference being Orion business is about break even profitability and should be well funded with recent capital raising of $20m plus the money raised from this placement


There revenues are ~$150 so twice XRO but growth this year will be lucky to be 30% so much less than XRO. Growth the most important if it can be maintained.

[sharp]

There revenues are ~$150 so twice XRO but growth this year will be lucky to be 30% so much less than XRO. Growth the most important if it can be maintained.

Their* not there

[Harvey Specter]

Their* not thereYou would have been horrified what it originally looked like before auto-correct then! ;)

[Casino]

There revenues are ~$150 so twice XRO but growth this year will be lucky to be 30% so much less than XRO. Growth the most important if it can be maintained.

Just to throw some numbers around:

SAP is paying nine times Concur’s ratio of enterprise value to estimated sales for next year, Thill said. That compares with the 8.1 times multiple it paid for SuccessFactors Inc., the 3.8 times it paid for Business Objects, and the 3.2 times value that Oracle paid for Sun Microsystems, Thill said.
...
Including debt, the deal is valued at about $8.3 billion.

http://www.bloomberg.com/news/2014-09-18/sap-to-buy-concur-for-enterprise-value-of-about-8-3-billion.html

[Arbitrage]

Anymore specifics?

The Company is seeking approval to issue up to $150 million of new shares. The proposed IPO aims to raise $120 million but the Board wants flexibility to respond to market demand.

[dingoNZ]

The Company is seeking approval to issue up to $150 million of new shares. The proposed IPO aims to raise $120 million but the Board wants flexibility to respond to market demand.


Have a link to the source?

[Harvey Specter]

Have a link to the source?He could tell you, but then he would have to kill you.

[winner69]

Have a link to the source?

I think you need to take it as good info or just ignore it if you seek 'evidence'

One thing you probably know more now than this morning by participating in Sharetrader

Like word on the street or pub talk no links to that either

[kiora]

I wonder how many shares they are issuing & if any existing shareholders are selling down???


The Company is seeking approval to issue up to $150 million of new shares. The proposed IPO aims to raise $120 million but the Board wants flexibility to respond to market demand.

[dingoNZ]

I wonder how many shares they are issuing & if any existing shareholders are selling down???


If this is the case they demand will be HUGE on the $120m, it will be massively oversubscribed. I imagine instos will be getting first dibs too, likely Milford first since they already have a finger in the pie

[Harvey Specter]

I wonder how many shares they are issuing & if any existing shareholders are selling down???I'd be surprised if Ian didn't take at least some money off the table as having a very large shareholder restricts liquidity plus I am not sure what his salary is but he deserves to have a bit of fun after building such a large company. It would be a very bad look if he sold down post IPO so the IPO would be the best time to do it.

Having said that, he is already down to 58% so he might not want to be diluted too low.

[kiora]

More likely they subscribed in last capital raising rather than this one??? If they support this as well it would be a big tick for Orion ?


If this is the case they demand will be HUGE on the $120m, it will be massively oversubscribed. I imagine instos will be getting first dibs too, likely Milford first since they already have a finger in the pie

[GoldenStag]

I'd be surprised if Ian didn't take at least some money off the table as having a very large shareholder restricts liquidity plus I am not sure what his salary is but he deserves to have a bit of fun after building such a large company. It would be a very bad look if he sold down post IPO so the IPO would be the best time to do it.

Having said that, he is already down to 58% so he might not want to be diluted too low.

I'd like to speculate that he should dilute down to 35%. If he is over 50% it spooks the instos because they are beholden to his voting rights and don't have sell down liquidity, and if it is too small % it makes everyone suspicious of the motives for the float. A 35% is big skin in the game, and plenty of cash taken out to have fun.

That said, I don't work for FNZC, so won't really get the chance to advise him on what to do.

[sb9]

Things have gone bit quieter on this one, anyone has more to add to the proposed IPO coming up later...

[Harvey Specter]

Things have gone bit quieter on this one, anyone has more to add to the proposed IPO coming up later...Refer post 17: http://www.sharetrader.co.nz/showthread.php?9817-Orion-Health&p=510217&viewfull=1#post510217

Once that goes ahead as planned, I assume it will be all on like Donkey Kong!

[percy]

I have just rung my broker at Craigs.No details for me just yet,not far away.

[GoldenStag]

Refer post 17: http://www.sharetrader.co.nz/showthread.php?9817-Orion-Health&p=510217&viewfull=1#post510217

Once that goes ahead as planned, I assume it will be all on like Donkey Kong!

Any outcome/news from said AGM?

[Hawkeye]

21 October 2014
PROPOSED IPO OF ORION HEALTH GROUP LIMITED
Orion Health Group Limited (“Orion Health”), a global provider of healthcare software solutions, is considering an initial public offer of ordinary shares to clients of retail brokers in New Zealand and institutional investors.
Orion Health is looking to raise between $120 and $150 million in the offer and an entity associated with CEO Ian McCrae are looking to sell up to $5 million of shares in the offer. The new capital raised would be used by Orion Health to:
(a) Accelerate its Research and Development capacity for new opportunities while maintaining its investment in its long established global business.
(b) Improve its implementation and delivery capability for its growing customer base.
(c) Provide additional financial liquidity.
It is expected that a prospectus and investment statement will be available in late October with the shares to be quoted on the NZX Main Board and ASX in late November.
No money is currently being sought and no applications for shares will be accepted or money received unless the subscriber has received an investment statement. Indications of interest will not involve an obligation or commitment of any kind.
Orion Health has applied to NZX Limited for permission to list and 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.

[sb9]

From NBR paywall, if anyone is keen for more details:

UPDATED 10AM: Orion Health Group, a global provider of healthcare software solutions, has confirmed it will raise between $120 million to $150 million in an initial public offer.
Along with raising new capital to fund its attack on the US market, an entity associated with chief executive and founder Ian McCrae will sell up to $5 million of shares in the float.
It is expected that a prospectus and investment statement will be available later this month with the shares to be quoted on the NZX main board and ASX in late November.
It's understood broker reports issued earlier this month had a wide ranging valuation on the company from between $550 million to $900 million though most analysts are picking the valuation will end up around the $800 million mark.
A bookbuild process will be held in early November where fund managers and institutions will state what shares they want and for what price. Deutsche Craigs and First NZ Capital have been appointed lead managers for the offer. There is expected to be strong demand for the IPO which has been talked about for the past two years.
The new capital will be used to accelerate the company’s research and development capacity for new opportunities in the management of patient healthcare, improve the implementation and delivery capability, and provide additional financial liquidity.
Orion Health was founded in 1993 by McCrae who remains the majority shareholder and chief executive. Its cloud-based products and solutions are used by clinicians in more than 30 counties for patient data exchange and to improve co-ordination of their care.
The company is split into three groups: Intelligent Integration which is the original part of the business and allows different IT systems within hospitals to talk to each other; Smarter Hospitals which collects all the information on patients into one portal and allows them to be looked after from administration to discharge from hospital; and Healthy Populations which links all health providers in one area and allows patients access to their own health records.
Most revenue in future is expected to come from the healthy populations group with a drive worldwide, and particularly in the US under Obamacare, to reduce spiralling health costs while improving the level of patient care from birth to death and prevent them needing expensive hospital treatment.
Revenue has grown to $153 million in the year ended March 31, 2014 and though Orion Health has been profitable in the past, it’s not currently while it reinvests most of its healthy cashflow back into expansion globally. Most of that has gone into new hires with total staff numbers now at 1,100 worldwide. It has achieved high growth rates ranging between 25 percent and 30 percent for many years and has a revised target of hitting $1 billion revenue by 2020. Some 90 percent of revenue is derived offshore.

[sb9]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11346088

[Harvey Specter]

http://www.sharechat.co.nz/article/7ad2aa20/orion-private-placements-provide-clue-for-ipo-price.html


The company has issued three lots of new shares this year, in June and August, with the shares priced on each occasion at $4 per share. That price multiplied by Orion Health’s current total shares of 140,033,954, values the company at $550 million.

[Santiago]

Holy cow. I just looked at their careers page, and they're hiring like crazy all over the world right now. I'm going to get my kids learning how to code- the number of jobs available in NZ, and elsewhere, with these guys, Xero, and others is off the hook. In terms of ambition, I guess Orion are planning a major push toward global domination based on their hiring plans.

[sb9]

Extract from NBR website: Price set between $4.30 to $5.70 per share, thoughts??? Bit steep IMO...


"Orion Health Group, which develops software systems for patient health management, wants to raise up to $150 million in an initial public offer which would value the firm at almost a billion dollars and give public investors up to 17.4 percent of the company.
The Auckland-based company plans to sell between 21.9 million and 29.1 million shares at $4.30 and $5.70 apiece, raising between $125 million and $155 million, the bulk of which will be new capital, according to its prospectus. That would value the company at between $720 million and $915 million by market value.
Alongside the new capital chief executive and founder Ian McCrae selling up to $5 million into the float. (Mr McCrae, recently added (http://www.nbr.co.nz/category/category/ian-mccrae) to the NBR Rich List, owns 58% of the company). Existing shareholders are estimated to keep between 82.6 percent and 86.3 percent of Orion after the float.
The new funds will be used to accelerate the company’s research and development capacity for new opportunities in the management of patient healthcare, improve the implementation and delivery capability, and provide additional financial liquidity.
A final price is expected to be set on Nov. 7, with a dual-listing on the NZX and ASX scheduled for Nov. 26. The offer opens on Nov. 10 and closes on Nov. 21.
Orion’s revenue grew to $153 million in the year ended March 31 and while it has been profitable in the past, it’s not currently because it is reinvesting most of its cashflow back into global expansion.
The company is forecast to post a loss of $14.8 million in the six months ended Sept. 30, 2014 on sales of $80.5 million. Annualised recurring revenue, the favoured sales measure of software as a service firms, is expected to rise to $52.1 million in the first half of the 2015 year from $44.2 million as at March 31.
The software developer has reinvested most of its recent cashflow into new hires, with total staff numbers now at 1,100 worldwide. It has achieved high growth rates ranging between 25 percent and 30 percent for many years and has a revised target of hitting $1 billion revenue by 2020. Some 90 percent of revenue is derived offshore."

[Beagle]

Looks like a great deal...for the promoter's.

[GoldenStag]

"value the company at between $720 million and $915 million by market value."

I guess they must be happy to list at the lower end of their IPO range.

[Casino]

Extract from NBR website: Price set between $4.30 to $5.70 per share, thoughts??? Bit steep IMO...


"Orion Health Group, which develops software systems for patient health management, wants to raise up to $150 million in an initial public offer which would value the firm at almost a billion dollars and give public investors up to 17.4 percent of the company.
The Auckland-based company plans to sell between 21.9 million and 29.1 million shares at $4.30 and $5.70 apiece, raising between $125 million and $155 million, the bulk of which will be new capital, according to its prospectus. That would value the company at between $720 million and $915 million by market value.
Alongside the new capital chief executive and founder Ian McCrae selling up to $5 million into the float. (Mr McCrae, recently added (http://www.nbr.co.nz/category/category/ian-mccrae) to the NBR Rich List, owns 58% of the company). Existing shareholders are estimated to keep between 82.6 percent and 86.3 percent of Orion after the float.
The new funds will be used to accelerate the company’s research and development capacity for new opportunities in the management of patient healthcare, improve the implementation and delivery capability, and provide additional financial liquidity.
A final price is expected to be set on Nov. 7, with a dual-listing on the NZX and ASX scheduled for Nov. 26. The offer opens on Nov. 10 and closes on Nov. 21.
Orion’s revenue grew to $153 million in the year ended March 31 and while it has been profitable in the past, it’s not currently because it is reinvesting most of its cashflow back into global expansion.
The company is forecast to post a loss of $14.8 million in the six months ended Sept. 30, 2014 on sales of $80.5 million. Annualised recurring revenue, the favoured sales measure of software as a service firms, is expected to rise to $52.1 million in the first half of the 2015 year from $44.2 million as at March 31.
The software developer has reinvested most of its recent cashflow into new hires, with total staff numbers now at 1,100 worldwide. It has achieved high growth rates ranging between 25 percent and 30 percent for many years and has a revised target of hitting $1 billion revenue by 2020. Some 90 percent of revenue is derived offshore."

Do we have half-year results of previous years?

[Beagle]

Will be good to have some competition for xero in the "New Zealand's greatest loss-making Saas" sweepstake.

Sweepstake implies that one might actually be a winner and make some real money...

[GoldenStag]

I was really looking forward to this IPO. I am quite deflated now. Why do some companies get too greedy whne they list? It ruins the IPO and hangs over the stock for months.

Annualised recurring revenue of $55m with a potential $915m sell tag?! This is nearly 20 times recurring company revenue - revenue! Not even talking about earnings!

[Harvey Specter]

Annualised recurring revenue of $55m with a potential $915m sell tag?! This is nearly 20 times recurring company revenue - revenue! Not even talking about earnings!The ARR is only $55m of the $80m revenue for the 6 months. So double thst for full year - $160m of revenue for the year. So about 5x revenue so not to bad. Growth is 'only' 20-40%.

[Casino]

Orion’s revenue grew to $153 million in the year ended March 31 and while it has been profitable in the past, it’s not currently because it is reinvesting most of its cashflow back into global expansion.


The ARR is only $55m of the $80m revenue for the 6 months. So double thst for full year - $160m of revenue for the year. So about 5x revenue so not to bad. Growth is 'only' 20-40%.

FY2014: 153m
FY2015: ~160m

20-40% growth?

[GoldenStag]

The ARR is only $55m of the $80m revenue for the 6 months. So double thst for full year - $160m of revenue for the year. So about 5x revenue so not to bad. Growth is 'only' 20-40%.

Okay, my mistake about the 6 months, but the full revenue isn't realy the money earner, so using annualised revenue again (for the whole year) you would have $915m / $110m = 8.3 which still makes me choke on my coffee.

Full revenue number isn't so bad, so I accept my initial posting is incorrect.

[GoldenStag]

fact sheet just released by FNZC

[Harvey Specter]

FY2014: 153m
FY2015: ~160m

20-40% growth?Their ARR is up about 30+% and historically over 25%. I heard their target for this year was $200m so it looks like they will be short of that. However, we dont know their sales profile. I knew one company that did 50% of their sales in the last month - it did this year after year.. i would be very surprised if growth this year was less than 20%.

[GoldenStag]

.. i would be very surprised if growth this year was less than 20%.

Fact sheet says 18%

[Casino]

Their ARR is up about 30+% and historically over 25%. I heard their target for this year was $200m so it looks like they will be short of that. However, we dont know their sales profile. I knew one company that did 50% of their sales in the last month - it did this year after year.. i would be very surprised if growth this year was less than 20%.

It's attractive if they can hit $1B revenue by 2020. Need to look into it a bit but my initial thoughts are that I would only consider the lower end of the bookbuilding range.

[Harvey Specter]

Fact sheet says 18%That is for first half. Still the second half to go.


It's attractive if they can hit $1B revenue by 2020. Need to look into it a bit but my initial thoughts are that I would only consider the lower end of the bookbuilding range.Well we will know the price before applications are due. Which probably means if its priced low, I wont be able to get an allocation, or if priced high, I can get as much as I want.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11349437

Definitely not for me.

[couta1]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11349437

Definitely not for me.
Nor me I'm in enough crap already without adding to the pile.

[bohemian]

I probably will as I don't have any tech stocks. It will be a bottom draw share but happy to hold quality.

[Casino]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11349437

Definitely not for me.

What's the point of not wanting to over-promise and yet pricing in 25-50% growth?

Some back-of-the-envelope calculations of how much growth is priced in based on (growth rate % / 10) + 1 = forward revenue multiple (http://kellblog.com/2013/06/05/what-drives-saas-company-valuation-growth/) formula.

Scenario 1 assuming 200m forward revenue

720m=3.6x P/S=26% growth
915m=4.6x P/S=36% growth

Scenario 2 assuming 160m forward revenue

720m=4.5x P/S=35% growth
915m=5.7x P/S=47% growth


Where is the discount/upside that hasn't been priced in?

[GoldenStag]

What is Gentrack's P/S I wonder?

I was comfortable with a listing range of $500m - $800m, but ratcheting it up to $720m-$915m and then not providing any forecasts seems a bit out-there for me.

The way I look at it is this...

The company is being valued at roughly $1b based on the fact that in 2020 it could end up with $1b worth of sales. Putting a finger in the air, I deduct that they get a net profit of 10% of this, leading to about $100m of net profit, which is then paid as an 85% dividend, or $85m. Which we then value as at about $1b due to the returns.

err.... so, we are paying $1b for a company that in 2020 might be worth erm.... $1b.

Overly simple numbers, but the point is... where have you left anything on the table for me?

Greedy. I'm out.

[traineeinvestor]

I agree with Casino and GoldenStag - there is an awful lot of growth over a lengthy time period priced into the offer price. Even if the company delivers (the likelihood of which I am unable to assess based on information provided), I don't see where the upside is for the punters.

No interest whatsoever from me.

[Casino]

If they were on track for 200m, I could easily see them trade at 1.2B after a short while. Without any indication, we don't know if/how soon the raised money will put them back on a sustainable growth track or even above it. There is a lot to be liked here but I would like them to inspire more confidence and excitement.

[GoldenStag]

I was really looking forward to this IPO. Another Hirepool though. Shame.

[Beagle]

What's the point of not wanting to over-promise and yet pricing in 25-50% growth?

Some back-of-the-envelope calculations of how much growth is priced in based on (growth rate % / 10) + 1 = forward revenue multiple (http://kellblog.com/2013/06/05/what-drives-saas-company-valuation-growth/) formula.

Scenario 1 assuming 200m forward revenue

720m=3.6x P/S=26% growth
915m=4.6x P/S=36% growth

Scenario 2 assuming 160m forward revenue

720m=4.5x P/S=35% growth
915m=5.7x P/S=47% growth


Where is the discount/upside that hasn't been priced in?

If someone put a gun to my head, (you'd have to because I wouldn't buy either), and said would you buy this or XRO ? I'd choose XRO in a heartbeat. At least that has genuine dynamic growth and is substantially made up of recurring business regardless of how over-priced it may be. I find it peculiar that such a small float would seek a dual listing with all the extra costs that incurs and the size of the company's loss $14.8m for the six months to 30 September 2014 on turnover of only $80m looks like a real worry especially seeing as how the company has been profitable before. How is it that the company has been able to grow at 25-30% growth in the past while remaining profitable.
All the low hanging fruit in this niche health sector already picked ? Floating a pup with little to no chance of making any money in the foreseeable future ?
Current growth rates slowing despite massive increase in new staff hire ? Pricing in the next six years prospective growth that may or may not happen into the present IPO price like reestablishment of consistent 30% growth in future years is a given ?
Have we got another Hirepool on our hands with a blatantly greedy promoter ?

[Wolf]

I had a brief look

Biggest red flags for me are
-McCrae retaining between 49.15% to 51.43% giving him so much control over votes.
- No guidance, if they can't forecast it then how the hell am i supposed to haha.
-To hard to value for me by DCF or other methods and i'm not a fan of P/S multiples.
- Goal of $1b Revenue in 2020 from my calculations assumes a Forward CAGR of 35.3% which IMHO i can't see considering
the 10 year operating revenue CAGR of 26%. Even though new funds should raise this and between 2010-2014 the CAGR was 33.6%.
- This highly speculative growth seem's very much priced in.
-They seem to have stumbled and $185m FY2015 seems more likely than $200m In my opinion.

Good Points
- Directors have significant skin in the game.
- Growing industry, a lot of growth available.


Overall personally i feel its a great company, but not a great price where the indicative price assumes a great deal of speculative growth. I see fair value in the lower range about $4.43. There are other speculative stocks such as ATM which offer more value in my opinion. I will wait to see broker research but apart from maybe a stag i'll most likely be on the sidelines.

[GoldenStag]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11349590

Herald article about the reaction to the weird "no forecast" decision by Orion.

I accept that software companies often have strange revenues. One I was working for actually had sales drop to $0 in one month during the Telco crisis. But Orion could have put a conservative sales forecast and then beat it. Why didn't they? I believe it is because it wouldn't then justify the silly price range they've gone for.

One has to ask why they are going to market? It is to rasie funds while they are losing money and trying to land grab. All good, but why wouldn't they just borrow the money for a small 150m? Well, rates are looking to rise, and going to market is risk-free capital for them, only downside is all the moaning punters who actually want a good investment. (like me)

I'm still somewhat bitter over this one. Why no forecasts and a stupid price range?
A great company, shame about the price.

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11349590

Herald article about the reaction to the weird "no forecast" decision by Orion.

I accept that software companies often have strange revenues. One I was working for actually had sales drop to $0 in one month during the Telco crisis. But Orion could have put a conservative sales forecast and then beat it. Why didn't they? I believe it is because it wouldn't then justify the silly price range they've gone for.

One has to ask why they are going to market? It is to rasie funds while they are losing money and trying to land grab. All good, but why wouldn't they just borrow the money for a small 150m? Well, rates are looking to rise, and going to market is risk-free capital for them, only downside is all the moaning punters who actually want a good investment. (like me)

I'm still somewhat bitter over this one. Why no forecasts and a stupid price range?
A great company, shame about the price.


Salt Funds Management managing director Paul Harrison said the lack of prospectus forecasts - combined with the $14.8 million loss Orion has reported for the six months to September 30, up from a $4 million loss in the same period of last year - was "disconcerting". "It doesn't give investors much to go on, particularly in a business that you're expected to pay for growth opportunities."

However, Harrison reckoned investors would give Orion "the benefit of the doubt".

Another fund manager, who did not want to be named, said the lack of forecasts required a leap of faith by investors. "Personally, if I don't get forecasts I don't invest."

Andrew Ferrier, Orion's chairman, said forgoing forecasts was "the prudent thing to do" and a huge amount of financial information was included in the prospectus.

Orion was previously profitable, with profit rising from $385,000 in the 2010 financial year to $7.8 million in the year to March 2013, according to the prospectus.

Great companies grow in a disciplined and well managed manner. For a company to have previously been this profitable in 2013 and growing at circa 30% and then slide towards a substantial loss with a materially slower growth something has gone wrong. There's a lot they're not saying by refusing to give forecasts. Maybe they have very little immediate prospects for new customers ?
Could it be as I suggested yesterday that all the easy low hanging fruit has already been picked ?
Why everyone keeps saying its a great company is a complete mystery to me. If it was so great they'd be building on the 2013 profit of $7.8m and still growing at 30% instead of now making massive losses and growing at a significantly slower pace...WTF ?

Love the fund managers comment who refused to be named who said, "personally if I don't get forecasts I don't invest", sums up a prudent person's thought processes in a lovely succinct way.

Investors rejected Hirepool promoters blatant greed and I was one of the first to call that the float might have to be pulled through lack of demand.
It wouldn't surprise me in the slightest if we see the same thing happen again. Just because something is in the racy sector of software and healthcare does not give promoters the right to stratospheric IPO pricing that already encapsulates many years of future highly speculative growth as though the growth had already happened.

[Balance]

Spoke with an investment banker who has dealt with Orion Health before. Arrogant and unrealistic are his comments.

Amen.

[kiora]

Great companies grow in a disciplined and well managed manner. For a company to have previously been this profitable in 2013 and growing at circa 30% and then slide towards a substantial loss with a materially slower growth something has gone wrong. There's a lot they're not saying by refusing to give forecasts. Maybe they have very little immediate prospects for new customers ?
Could it be as I suggested yesterday that all the easy low hanging fruit has already been picked ?
Why everyone keeps saying its a great company is a complete mystery to me. If it was so great they'd be building on the 2013 profit of $7.8m and still growing at 30%.

Love the fund managers comment who refused to be named who said, "personally if I don't get forecasts I don't invest", sums up a prudent person's thought processes in a lovely succinct way.

Unknowns = uncertainty yes
My view is they,re stepping on the gas this year to capture the market,just taken on 500? new staff to ramp this up.This would have a material affect on expenses of say $100,000/new employee ?($50,000,000)
This would affect bottom line initially until sales ramp up
In my view Ian McCrae has done a great job getting the co where its got to without markedly diluting his shareholding,taking on more debt,or continuing to go back to shareholders for capital raising
It has been farely cash flow neutral pretty well since its formation.That takes a great CEO to achieve that with this type of rapidly developing company
From what I,ve seen it also does not have any ? options to dilute shareholdings once it is listed

[Harvey Specter]

Why everyone keeps saying its a great company is a complete mystery to me. If it was so great they'd be building on the 2013 profit of $7.8m and still growing at 30% instead of now making massive losses and growing at a significantly slower pace...WTF ?DIL is profitable, Revenue of $70m, Cash reserves, Growth of 70% and a market cap less than $400m.

I think I am out.

[GoldenStag]

It is a shame that Brian Gaynor is already in the mix. He is often one of the more vociferous and dissenting characters out there and I greatly respect him for it. However; this time he sits uncomfortably on the sell-side (sort of) and it is unlikely we'll get to hear him go both barrels at the IPO documentation like I think he would.

[kiora]

It is a shame that Brian Gaynor is already in the mix. He is often one of the more vociferous and dissenting characters out there and I greatly respect him for it. However; this time he sits uncomfortably on the sell-side (sort of) and it is unlikely we'll get to hear him go both barrels at the IPO documentation like I think he would.

Sell side?
You mean he has a vested interest as Milford Asset management have 2.4 % of Orion Health already ?

[Balance]

Sell side?
You mean he has a vested interest as Milford Asset management have 2.4 % of Orion Health already ?

Vested interest and conflicted etc etc.

[GoldenStag]

Sell side?
You mean he has a vested interest as Milford Asset management have 2.4 % of Orion Health already ?

Yes, I believe it would be imprudent of him to voice an opinion during the IPO. It effectively silences one of the biggest critics of IPO documentation and consequently means we are missing out on what would be a great article to read.

Caveat - I could be wrong...

[kiora]

I haven't seen anywhere that Milford are looking to exit ???

On the plus side for the float
1)Milford Asset Management have previously "voted" with there wallet.They supposedly liked something ?
2) This will be tightly held
3) NZX 50 inclusion ?
4)CEO has IMHO tightly managed cash flows to grow the business to where its got to.A remarkable achievement.
5)Fast growing Healthcare
6) Pricing at IPO relatively inexpensive to turnover compared to Xero
7)IPO will be at lower end of indicative range because of uncertainties regarding forward T/O & profitability ?

Disclaimer:Investor in Orion Health

[GoldenStag]

I haven't seen anywhere that Milford are looking to exit ???

On the plus side for the float
1)Milford Asset Management have previously "voted" with there wallet.They supposedly liked something ?
2) This will be tightly held
3) NZX 50 inclusion ?
4)CEO has IMHO tightly managed cash flows to grow the business to where its got to.A remarkable achievement.
5)Fast growing Healthcare
6) Pricing at IPO relatively inexpensive to turnover compared to Xero
7)IPO will be at lower end of indicative range because of uncertainties regarding forward T/O & profitability ?

Disclaimer:Investor in Orion Health

1) Milford bought at a $550m valuation price. I'd buy too at this price.
2) Yes. Low liquidity though.
3) NZX50 has liquidity calculations for inclusion. So, with McCrae holding so much, it may mean it can't get into the index. Anyone able to confirm?
4) Hmmm. I'm not sure of this one. He has brought on investors throughout the time and sold their building etc to keep everything going. This isn't really a cashflow magician.
5) Absolutely!
6) Comparison to XRO is only due to being a growth stock, nothing more IMHO. Lumpy sales into big organisations like hospitals and power companies smacks more like Gentrack to me.
7) I like your crystal ball. This isn't a plus side, this is an issue. No forecasts is just plain weird.

[Harvey Specter]

1)Milford Asset Management have previously "voted" with there wallet.They supposedly liked something ?

Disclaimer:Investor in Orion HealthMilford not looking to exit. I think they were just saying they had a vested interest in making it go well.

You say Milford voted with their wallet. At what price did they vote?

[Xerof]

No forecast means none of my money will head their way. I am not even going to bother reading their prospectus.

A single question though - are current shareholders required to escrow all or part for any period?

IMO, the most professional IPO seen in recent years was Synlait. The price left plenty on the table for the bright-eyed new shareholders, and existing holders were locked away for a declared portion of their holding. THAT IS CLASS

[Balance]

No forecast means none of my money will head their way. I am not even going to bother reading their prospectus.

A single question though - are current shareholders required to escrow all or part for any period?

IMO, the most professional IPO seen in recent years was Synlait. The price left plenty on the table for the bright-eyed new shareholders, and existing holders were locked away for a declared portion of their holding. THAT IS CLASS

And the existing shareholders are China Chinese! Amazing!

[kiora]

At a far lower price but at an earlier stage/risk in the companies development

I endeavor to invest in the Q of management not just the Co

[Harvey Specter]

At a far lower price but at an earlier stage/risk in the companies developmentI have only had a quick look but it seems as if new shares were issued in the past 6 months for less than $4. about a 25% increase if it IPO's at the low amount.

[Beagle]

At a far lower price but at an earlier stage/risk in the companies development

I endeavor to invest in the Q of management not just the Co

I'm totally with Balance on the arrogant and unrealistic comment. Quality management make sensible conservative and pragmatic forecasts and grow their company is a disciplined and sensible way and bring a company to market with sensible financial ratio's. Taking on 500 staff and being unable to assure the market that growth will not even continue at previous rates when the company was profitable looks like a highly risky strategy i.e. like an all or nothing bet to me...with other people's money. Quality management...yeah right, is it too early for a Tui ? Thanks for disclosing your vested interest but with all due respect it was plainly obvious already.

[kiora]

I'm totally with Balance on the arrogant and unrealistic comment. Quality management make sensible conservative and pragmatic forecasts and grow their company is a disciplined and sensible way and bring a company to market with sensible financial ratio's. Taking on 500 staff and being unable to assure the market that growth will not even continue at previous rates when the company was profitable looks like a highly risky strategy i.e. like an all or nothing bet to me...with other people's money. Quality management...yeah right, is it too early for a Tui ? Thanks for disclosing your vested interest but with all due respect it was plainly obvious already.

You're welcome Roger
Heads up :)

[Joshuatree]

Thanks for your pro view kiora and your equanimity. always good to get bit of balance and opposing views.

[kiora]

Thanks for your pro view kiora and your equanimity. always good to get bit of balance and opposing views.

Thanks Joshuatree ,its seems that the negatives can displace the positives on the sharetrader sometimes.

[Balance]

Thanks Joshuatree ,its seems that the negatives can displace the positives on the sharetrader sometimes.

Lack of financial forecasts mean the company is not prepared to be measured and judged against stated strategies and goals.

Looking like a NXT listing where it's no care and no responsibility?

[Harvey Specter]

Thanks Joshuatree ,its seems that the negatives can displace the positives on the sharetrader sometimes.If it has listed last year when everyone was bullish on tech stocks, it would have been different. They could have sold at over $1B and everyone would have been piling in.

[kiora]

Lack of financial forecasts mean the company is not prepared to be measured and judged against stated strategies and goals.

Looking like a NXT listing where it's no care and no responsibility?

OR It could be that Macrae doesn't want to get it wrong and doesn't want another "Gentrack" like incident after listing

[GoldenStag]

If it has listed last year when everyone was bullish on tech stocks, it would have been different. They could have sold at over $1B and everyone would have been piling in.

Yep. I was quite thankful that the instos stood up to Hirepool and voted with wallets closed. It helped bring perspective again.

As I've said before, I view Orion more like Gentrack than Xero with the same traits - software, growth, lumpy sales, sticky customers, potential moat. So, let's look at GTK here...

Market capitalisation
GTK = $150m versus Orion = $720m - $915m ( x 4.8 - x 6.1 )

Revenue
GTK = $40m versus Orion = $160m - ( x 4)

EBITDA
GTK = $14m versus Orion = -$5m - ( x -0.4 ) but looking further back to be generous Orion 2012 = $8m ( x 0.6 )

Don't get me wrong, I really like Orion and its prospects above that of Gentrack. But in a comparison all of the good things like EBITDA and Revenue don't have big multipliers, and all of the bad things like price do have big multipliers. So, stacking one software company against another software company with similar lumpy customers and global growth, you get some strange comparison numbers.

It leaves me wondering where the good stuff is for the investors. Are we just supposed to go "Okay we'll give you money based on how much you say it is worth and when you feel like it, you can give us some money later if you reach your goals in 2020".

[GoldenStag]

Market capitalisation
GTK = $150m versus Orion = $720m - $915m ( x 4.8 - x 6.1 )
Revenue
GTK = $40m versus Orion = $160m - ( x 4)


The interesting this is that if you kept the revenue multiplier of 4 for GTK to Orion and applied it to market capitalisation, then you would get Orion = GTK x 4 = $150m x 4 = $600m.

Now this is an okay price number and would be in the original mooted $550m - $800m price range.

I'd be keen at $600m and also happy to pay a bit of a premium above that because I like Orion's prospects. But it still wouldn't get up to the $720 - $915m range of the IPO.

[kiora]

Yep. I was quite thankful that the instos stood up to Hirepool and voted with wallets closed. It helped bring perspective again.

As I've said before, I view Orion more like Gentrack than Xero with the same traits - software, growth, lumpy sales, sticky customers, potential moat. So, let's look at GTK here...

Market capitalisation
GTK = $150m versus Orion = $720m - $915m ( x 4.8 - x 6.1 )

Revenue
GTK = $40m versus Orion = $160m - ( x 4)

EBITDA
GTK = $14m versus Orion = -$5m - ( x -0.4 ) but looking further back to be generous Orion 2012 = $8m ( x 0.6 )

Don't get me wrong, I really like Orion and its prospects above that of Gentrack. But in a comparison all of the good things like EBITDA and Revenue don't have big multipliers, and all of the bad things like price do have big multipliers. So, stacking one software company against another software company with similar lumpy customers and global growth, you get some strange comparison numbers.

It leaves me wondering where the good stuff is for the investors. Are we just supposed to go "Okay we'll give you money based on how much you say it is worth and when you feel like it, you can give us some money later if you reach your goals in 2020".

Yes I agree with what you are saying Goldenstag. In my view investors also need to assess the potential market and the ranking of the Company in that market.There are others in Orion Health space but they have first mover advantage particularly in the USA ? Which also carries its own risks etc

[Harvey Specter]

As I've said before, I view Orion more like Gentrack than Xero with the same traits - software, growth, lumpy sales, sticky customers, potential moat. Good comparison. Do you know what GTK historical growth looks like?

[GoldenStag]

Good comparison. Do you know what GTK historical growth looks like?

GTK revenue
2012 $13m
2013 $40m
2014 $38m (forecast)

[Tomtom]

Obviously I'm terribly old fashion in expecting goals and forecasts...all that stuff that holds companies to account and sets expectations. Similarly in expecting to earn a return on my investments. Clearly I'm not clever enough to invest in this new paradigm.

[Beagle]

Two examples of egregious greed in IPO pricing in one year, who'd have thought that those promoters wouldn't have learned from the Hirepool fiasco...

[Joshuatree]

From Market analysis James Cornell

Orion Health Group Ltd, a software company established 21 years ago, is seeking to raise $120 million in new cash from the issue of 21.1 - 27.9 million new shares at a price of 430-570 cents per share.

Existing shareholders will also sell $5.0 million worth of shares (i.e. 0.9-1.2 million shares) to the public in the Initial Public Offering.

Orion Health Group was a profitable business through to March 2013, earning a net profit of $7,750,000 but since 2012 has been “strategically focused on aggressively growing market share” in the United States, which has “required us to scale our delivery at a speed which has generated challenges, which in turn has adversely impacted our margins in the short term”.

In other words, they have had to spend a lot more on Research & Development and on Sales & Marketing to grow in a very competitive market. Expenses have increased faster than revenues and the business has become unprofitable.

Why would you want to buy into a company that had been “adversely impacted” by events? Perhaps because that might depress the share price and offer a low buying opportunity? Well, that does happen on the stockmarket, but not in the IPO market!

How “adversely” has Orion Health Group been impacted? Judge for yourself. The prospectus uses the word “adversely” no less than 42 times. Investors may be a little “adverse” to invest in a company with that many problems.

So lets look at some valuation statistics.

The market capitalisation after this Initial Public Offering will be around $720-915 million (depending upon the issue price of the shares). That is 93-118 times the net profit earned in 2013 (i.e. a P/E of 93-118) but the company became unprofitable in the year to March 2014 with a loss of $1,137,000. In the half year to 30 September, the company lost $14,756,000. Unfortunately, there is no suggestion that the company will return to profitability in the foreseeable future!

At least the brokers selling this IPO don't have to worry about a ridiculously high P/E ratio - but perhaps investors should worry.

Annual revenues to March 2014 were $153.0 million. Only 29% were recurring revenues, although these will increase in the future as the company moves from one-off, upfront, perpetual software sales to recurring annual Software as a Servicerevenues. Unfortunately this transition adversely - yes, that word again - impacts on revenue growth and profitability in the short to medium term.

We like software companies but profitable software companies can be purchased on Price/Sales ratios of 3-5½ (or lower). Orion Health Group's $720-915 million market capitalisation is a Price/Sales ratio of 4.7-6.0. That looks a little expensive, especially as most revenue growth has been from lower margin “implementation services” and “managed services” while high margin “perpetual licence” revenues will decline significantly (i.e. from more than 30% of revenue to just “10-15%” over the “medium term”).

For an unprofitable software company, we might be more interested at a P/S of 2-3. That would value the shares at about halftheir proposed IPO price.


Summary and Recommendation

Software is a great business, especially companies (like Integrated Research and Technology One) that can finance Research & Development (to improve and expand their services) and Sales & Marketing (to win new customers) out of revenues to generate profitable growth and also pay dividends!



Unprofitable software companies involve much higher risks, so are less attractive for investment. Logic is inverted when they are priced at a higher valuation. Why would investors pay more for a company that fails to earn a profit and is unable to finance its growth from internally generated cashflows?

So Orion Health Care may be a great company, but at a high valuation and with an unprofitable business it is not something we shall be buying for our portfolio.

[Harvey Specter]

Thanks JT.

Has anyone read the IM to see what lockup is for existing shareholders.

[kiora]

Thanks JT.

Has anyone read the IM to see what lockup is for existing shareholders.

Interesting article from JS .Plenty of reasons why not to buy ! Lock up is 3 months from listing HS

[Beagle]

Thanks JT.
Three months lock-up borders on re-defining the meaning of the term.

[Harvey Specter]

Interesting article from JS .Plenty of reasons why not to buy ! Lock up is 3 months from listing HSOnly a 3 month lock-up and no forecasts. 3 months wont even take them to year end - it should at least be after the release of the 2015 financial statements.

[GoldenStag]

Shocking!

Who advised these guys?! They must have known that no forecasts, no lock up, and a greedy price range would be too much to shove down punters' throats in one sitting.

Hirepool Hirepool Hirerionool Hirerion Orion

[Billy Boy]

Here's a new term ....
"Discount to IPO"
BB:)

[Beagle]

I am curious regarding the question of whether this issue is underwritten ? If so I suspect the underwriters might be the ones to call force majeure...they usually have these sort of clauses in the agreement to avoid getting an absolute pasting.

[bunter]

The word 'underwr*' (underwriter, underwritten etc) doesn't appear in the investment statement.

[Beagle]

The word 'underwr*' (underwriter, underwritten etc) doesn't appear in the investment statement.

Thanks. I'm starting to think this might be a truly epic fail.

[RRR]

I have applied for a few! Expecting significant scaling!

[blah]

Interesting article from JS .Plenty of reasons why not to buy ! Lock up is 3 months from listing HS

The 3 months escrow is only for Pioneer Capital (10% shareholder). Another large shareholder, G A Cumming, is holding on for 12 months from listing date. McCrae, Directors and Senior Management are holding on at least until the release of 30 Sept 2015 half year results.

[cornell]

From Market analysis James Cornell

Orion Health Group Ltd, a software company established 21 years ago, is seeking to raise $120 million in new cash from the issue of 21.1 - 27.9 million new shares at a price of 430-570 cents per share.



Joshua, Please don't publish other people's work online. You can make small quotes, but not the whole thing.

[percy]

Joshua, Please don't publish other people's work online. You can make small quotes, but not the whole thing.

Well done Cornell,a very good article.

[winner69]

What is the issue Cornell. It's a good article. Well done.

It's that Joshua (hopefully) and others pay good money to get these insights.

You could get them as well .... http://www.stockmarket.co.nz/mastart.htm

(I not subscriber)

[Joshuatree]

Joshua, Please don't publish other people's work online. You can make small quotes, but not the whole thing.

Apologies and thanks. You got some good publicity tho:blush:

[warthog]

Shocking!

Who advised these guys?! They must have known that no forecasts, no lock up, and a greedy price range would be too much to shove down punters' throats in one sitting.

Hirepool Hirepool Hirerionool Hirerion Orion

Feltex, Hirepool, Orion.

[bunter]

FNZC just reminded me of the closing date for expressions of interest in this.
Low interest?

[GoldenStag]

So, I'm keen to see if people have been going for the IPO and a few more reasons to invest. My posts were starting to border on the evangelical against investing in Orion Health, so I'm hoping to see a bit more of the other side of the coin. Anyone go for this IPO?

[zigzag]

So, I'm keen to see if people have been going for the IPO and a few more reasons to invest. My posts were starting to border on the evangelical against investing in Orion Health, so I'm hoping to see a bit more of the other side of the coin. Anyone go for this IPO?

Isn't it a bit premature to make a decision, as we won't even know the final price until the end of the week. All I know so far is that it is in the range of $4.30 - $5.70. The bottom of the range looks OK, but over $5.00 it starts to look quite expensive.

[GoldenStag]

Isn't it a bit premature to make a decision, as we won't even know the final price until the end of the week. All I know so far is that it is in the range of $4.30 - $5.70. The bottom of the range looks OK, but over $5.00 it starts to look quite expensive.

FNZC have told me they need firm orders in by close of business today. This is to allow them to bid in the bookbuild.

[RGR367]

FNZC have told me they need firm orders in by close of business today. This is to allow them to bid in the bookbuild.

Everytime I get an email from my broker reminding me about an IPO is the signal I need NOT to participate on it. I voted NO on the poll too.

[Xirr]

For the lazy like me, what is $4.30 in terms of market cap. I would be interested at market cap to sales of around 3x for Orion.



Isn't it a bit premature to make a decision, as we won't even know the final price until the end of the week. All I know so far is that it is in the range of $4.30 - $5.70. The bottom of the range looks OK, but over $5.00 it starts to look quite expensive.

[zigzag]

FNZC have told me they need firm orders in by close of business today. This is to allow them to bid in the bookbuild.

I have only indicated a dollar amount that I would be interested in. It is a genuine indication, but not a binding one. I will most likely participate, but will not be betting the farm on it.

[Harvey Specter]

FNZC have told me they need firm orders in by close of business today. This is to allow them to bid in the bookbuild.ASB have done the same. Not sure how binding it would be on me as no cotract but if it wasn't popular and they were left holding the shares, they would try their best to push to me no doubt.

Decided not to go into this one.

[percy]

I have been running hot and cold on this IPO.
To be fair on my broker I rang him a short time ago and told him I did not want to proceed.
He thanked me as he had to bid this afternoon.

[GoldenStag]

I have been running hot and cold on this IPO.
To be fair on my broker I rang him a short time ago and told him I did not want to proceed.
He thanked me as he had to bid this afternoon.

I have been feeling the same and done the same (said no thank you). Now to sit and see how the bookbuild goes.

[Harvey Specter]

The irony of very few (here atleast) showing invest is that it will probably be priced at the bottom to the range, which makes it much more attractive.

If it does, I may call my broker and ask to be put on the waiting list in cae someone pulls out.

[Harvey Specter]

Book build is today and tomorrow so we should know the price by Friday night. Applications from Monday but (I assume) will will have to have pre-ordered an allocation from your broker as there is no public pool.

[Harvey Specter]

NBR is reporting it is 9x over subscribed!: http://www.nbr.co.nz/article/heavy-scaling-tipped-amid-strong-demand-orion-health-shares-db-p-165027

[GoldenStag]

NBR is reporting it is 9x over subscribed!: http://www.nbr.co.nz/article/heavy-scaling-tipped-amid-strong-demand-orion-health-shares-db-p-165027

Well I'll be a son of a gun. I didn't pick it, that's for sure.

[RRR]

I am with ASB, so not hopeful of getting many. For my wife I did express interest with Craigs but have not heard from them!

[Xirr]

IN a few years time if the media start running stories of goldie oldies that have lost all their money by investing in tech ipo's - i will deadset laugh my ass off.

This is finance companies v2.0

Orion is actually a good company, but I can't see the returns the demand/price range is implying.

[Beagle]

IN a few years time if the media start running stories of goldie oldies that have lost all their money by investing in tech ipo's - i will deadset laugh my ass off.

This is finance companies v2.0

Orion is actually a good company, but I can't see the returns the demand/price range is implying.

Yep, couldn't agree more. Their sales growth is hardly what you'd call stellar and apparently having conservative projections and actually growing EPS doesn't count for anything anymore.
All something needs is a couple of magic words like "healthcare" and "software" and its off too the races.
I can think of one company that's growing real EPS at the same rate that this company is growing sales and it sells on a PE of 11...not in the magic sector so it doesn't count apparently...(casts a wistful glance as his old abacus, shrugs shoulders and wonders how the world got so bloody crazy)

[janner]

I can think of one company that's growing real EPS at the same rate that this company is growing sales and it sells on a PE of 11...not in the magic sector so it doesn't count apparently...(casts a wistful glance as his old abacus, shrugs shoulders and wonders how the world got so bloody crazy)

Well Roger... One has to hope that you are " Well positioned " in the not said Company ;-)))))

[noodles]

I can think of one company that's growing real EPS at the same rate that this company is growing sales and it sells on a PE of 11...not in the magic sector so it doesn't count apparently
Do tell please:)

[Beagle]

Well Roger... One has to hope that you are " Well positioned " in the not said Company ;-)))))

As long as they don't start lending to mickey mouse software companies running at a huge loss we'll be all good :D Not well enough positioned, my freshly polished crystal ball is now telling the same story as W69 for 2015 and even has profit in the early 60's m for 2016 !!

[Balance]

IN a few years time if the media start running stories of goldie oldies that have lost all their money by investing in tech ipo's - i will deadset laugh my ass off.

This is finance companies v2.0

Orion is actually a good company, but I can't see the returns the demand/price range is implying.

Take some of the pimpled faced journos out to lunch, wine and dine them and they will write anything you want them to.

That's how some of them wrote wonderful stories about the finance companies and of some of the characters.

Likewise now, the tech sector.

Already millions of dollars have been lost on Xero, GeoP, Serko etc etc.

But the media desperately needs their advertising revenues, see?

[Beagle]

Do tell please:)

Extrapolate the trend as they build their book 11m first Q, 12m second Q, 13m e.t.c. I wonder if I could write a computer program for that :D

[noodles]

Extrapolate the trend as they build their book 11m first Q, 12m second Q, 13m e.t.c. I wonder if I could write a computer program for that :D
HNZ of course!
My brain has been clouded by thoughts of great first day profits on Orion:)

[Balance]

Sign of the times :

http://www.nbr.co.nz/article/david-kirks-tech-fund-raise-a40-million-asx-invest-nz-aus-tech-164983

[kiora]

I can't wait !

[Slam dunk]

For those who couldn't view the paid NBR content here is a Herald article talking about demand

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11354405

[okane]

Shares are priced at $5.70. Highway robbery IMO.

http://www.stuff.co.nz/business/industries/63004464/Orion-Health-shares-priced-at-5-70

[GoldenStag]

Shares are priced at $5.70. Highway robbery IMO.

http://www.stuff.co.nz/business/industries/63004464/Orion-Health-shares-priced-at-5-70

All I can say is, Wow!
Congrats to McCrae.

[BlackPeter]

Shares are priced at $5.70. Highway robbery IMO.

http://www.stuff.co.nz/business/industries/63004464/Orion-Health-shares-priced-at-5-70

Consistent with the current bull cycle. People are afraid to miss out and seem to be happy to pay for something which is not even a promise (no forecast). Might develop into Gentrack Mark 2. Shall wait for the dust to clear, I am pretty sure there will be opportunities to buy in below IPO price. The only question for me is when.

[Balance]

Let's wish Orion Health well - NZ needs more companies like Orion for the generation of graduates coming through for inspiration.

[Harvey Specter]

All I can say is, Wow!
Congrats to McCrae.


Let's wish Orion Health well - NZ needs more companies like Orion for the generation of graduates coming through for inspiration.my sentiments exactly. Onward and upward and bring on the next succesful company hiring lots of NZer's.

[Schrodinger]

my sentiments exactly. Onward and upward and bring on the next succesful company hiring lots of NZer's.

Considering the big bad Americans wanted to buy him for $50M I am glad he held out and its now worth $1B to NZ.

[IAK]

Yep, well done Orion. too rich for my blood.

[blah]

update: ASB Securities has not managed to get any allocation for Orion Health

[Harvey Specter]

update: ASB Securities has not managed to get any allocation for Orion HealthThey suck - Glad I didn't try.

Anyone know if ANZ got any or are the big boys playing anticompetitive with the discount brokers.

[Beagle]

The tech world has gone mad, enough said.

[kiora]

Yey & I've got all the shares I wanted and exceptionally strong institutional support.Congrats to all in Orion Health
:t_up:

[Slam dunk]

How did you manage that? Ive been told I'm likely to be scaled back considerably.

[Tomtom]

The tech world has gone mad, enough said. Firstly I hope this does well for all those who've invested.

Tech has always been a difficult investment for me because few companies in the industry appear an attractive proposition from my very traditional perspective (Porters 5 forces for example.)

[Chaowee88]

Will be interesting to see how this goes when trading begins. Serko also had strong insto and retail support but flummoxed badly upon listing.

I remember I got scaled back 40% in SKO even with just a small allocation

[BFG]

holy crap this values the company at close to 1 billion $............utter utter madness

Is Orion worth slightly less than EBO? Is it worth more than CNU? The answer to both is no!

Time to call top? NZs Ali Baba?

[winner69]

Is Orion worth slightly less than EBO? Is it worth more than CNU? The answer to both is no!

Time to call top? NZs Ali Baba?

Markets higher now than when Ali Baba IPO ...but I get the gist of what you saying ......but remember this time it's different, totally different

[kiora]

Madness ? Time will tell.Their target client market is HUGE
Pro
- Healthcare
- Patient health management
- Preventative medicine
- High client retention rate
- Saas
- Implementation aids in reducing healthcare costs by up to 30 % ?
- Genomics & research on its big data analytic's and predictive modelling software.
- For predictive and preventive medicine and likely for treatment of conditions in the future ?
- First starter momentum advantage in their field particularly in USA (Microsoft even "gifted " the software they had developed to Orion Health.Hopefully not because they couldn't see how to make money out of it)
- Experienced management in their field with skin in the game
- Will be tightly held after listing with high over subscription at IPO due to institutional support ? Little public investor support could be an advantage.
- Likely will list well as will be included in NZX 50 ? Potential for other indices?
- Turnover growth curve could easily accelerate (exponentially?)

Con
- Competitors starting to get organised ?
- How long before profitable ?
- Will need more capital ? They have done pretty well up to now at financing their needs through own cash flow up to now.This is likely to change with their recent recruitment taking employee numbers from 600 ? to 1100 ? this year ?

[Xirr]

September quarter inflows to Kiwisaver funds were $1.4 billion.

If Kiwisaver funds dont pay over the odds to get new listings, they wont attract more listings which they desperately need. If money isnt invested in NZ, the managers have to pay offshore funds to manage the money, which reduces returns to the NZ managers. This is a once in a lifetime gravy train for fund managers and they are going to take it for all its worth.

Please see this flood of tech listings for what it is, these companies arent that great (some are ok) and dont justify their values, however NZSX needs more market cap to pay for the fund managers new Ferrari/Herne Bay villa.

FWIW I got some Orion shares - dont know my allocation yet - if govt wont regulate this kiwisaver gravy train, then I'm going to catch the ride.

[RTM]

I've been agonising over getting some of these after having been a wee bit burnt with Serko. In the end I have decided not to proceed.
My rationale was based largely on the following table:
Market Cap Revenue Ratio
Orion 950 156 6.08974359
F&P 2990 623 4.799357945
DEL 471 222 2.121621622
SKY 2450 909 2.695269527
Steel Tube 262 442 0.592760181
PGW 348 1200 0.29
HNZ 482 122 3.950819672
WHS 1090 2650 0.411320755
Briscoes 623 483 1.289855072
Yes....I guess it is somewhat crude....and does not take into account profit etc etc.
But I'd be interested in what other folk thought about considering this ratio? For instance, PGW seems pretty low. This seems to mean that if buying PGW at current price, one would be getting a lot more revenue per dollar, than say F&P. And then one would have to consider margins etc. Bed time....made my decision. Good luck to whoever picks up my Orion ones. They will probably go like a rocket now.
Cheers
RTM
PS Hate this editor....table looked fine on my screen.

[Beagle]

Market cap to revenue ratio is of some use in my opinion in that it gives an insight into possible extra profitability if there's some margin expansion.
Companies like AIR and PGW trade on very thin margins but if there's scope for improvement as I believe there is then there's potential for significant EPS increases.

[percy]

The ratio is often called the price to sales ratio.p/s
I think it is best used when comparing companies in the same sector.
I have found it a very useful tool.
James Cornell of Securities Research Company uses it in his newsletter "Market Analysis."Joshuatree did quote Cornell's excellent article on this thread post #99.You can read old issues on line,so you can see the p/s ratios for a number of companies.

[Newman]

National Business Review: "Telstra spends $20 million for 2% of Orion Health in IPO bookbuild"

First NZ Capital scaled back two third for clients who wanted to buy at $5.70. Expect a further surprise when Orion lists in 2 weeks time.

[kiora]

Link to Telstra purchase
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11357959

[Slam dunk]

First NZ Capital scaled back two third for clients who wanted to buy at $5.70. Expect a further surprise when Orion lists in 2 weeks time.

What do you mean?

[dingoNZ]

Also curious what you're referring too?

[Harvey Specter]

What do you mean?


Also curious what you're referring too?with that level of demand, this things only going one was on opening. Over $1B

[dingoNZ]

Oh I though he was referring to something different, my apologies. Agreed, and given all the positive press one would suspect they will be both strong insto buy and retail buying come 26 Nov.

[noodles]

I think I'm slowly starting to understand the story now. I recommend readers have a listen to this.

http://podcast.radionz.co.nz/business/bus-mnr-20141114-0648-orion_health_poised_to_take_advantage_of_opportuni ties-048.mp3

[kiora]

I think I'm slowly starting to understand the story now. I recommend readers have a listen to this.

http://podcast.radionz.co.nz/business/bus-mnr-20141114-0648-orion_health_poised_to_take_advantage_of_opportuni ties-048.mp3

Thanks Noodles for posting the podcast & I'm pleased you're starting to understand the story.If Orion can execute the big data analysis,genomics & preventative medicine capabilities it will be close to the Holy Grail of Health Care IMHO.For patients safety and health buget savings by avoiding health test duplication its a big yes from me

[BlackPeter]

I think I'm slowly starting to understand the story now. I recommend readers have a listen to this.

http://podcast.radionz.co.nz/business/bus-mnr-20141114-0648-orion_health_poised_to_take_advantage_of_opportuni ties-048.mp3

Interesting podcast - cheers.

Yes, there are huge opportunities in the health market, and if OHE remains the only company in the world to explore them, than no doubt the current SP is fully justified.

Just wondering however, whether they have really that much specific IP and knowledge that it is impossible for others to jump on the bandwagon? If they do, than there is as well the risk that governments and insurances might as well go with the (local / bigger / better known to the purchaser) supplier.

Even if we assume for a moment that OHE are the best .... just looking at past big IT projects ... did New Zealand always pick the most capable and knowledgeable software provider or did we go instead with whoever managed to best pull the wool over our bureaucrats eyes (remember INCIS, Novopay)?

Wishing OHE all the best, and certainly a business worthwhile to invest in (at the right price), but in my view does the current SP not adequately reflect the risks which are in this business.

However - great if it works out, I would like to see more successful New Zealand Export business.

[kiora]

Remember Orion started 20 years ago developing their software and predominately used their own cash flow to finance this development.This is no mean feat IMHO They aren't some one hit wonder/Novapay debacle again !
They now have operations in 26 countries with the major users being in the USA.I would imagine it would be the hardest sell/critical in the USA than any other country in the world.Their is no way it would be able to pull the wool over anyone's eyes there!Even in Turkey ,I would suggest one of the most least likely countries in the world,a new hospital is implementing the Orion Healthcare fully integrated software system.
Yes there are other Hospital /patient software providers but why has Orion Health just carried out this IPO? I strongly suspect to keep well ahead of the pack in developing and integrating big data analysis, genomics and preventive medicine.This IS THE FUTURE OF HEALTHCARE ! Yes sales and profitability is likely to be lumpy within the next 5-6 years BUT what is it going to be like by the year 2020 ?
Some investors may question why its capitalized so high compared to PEB & Xero.I suggest it is capitalized so much higher because of Orion Health's sales record and the potential in the future growth IF they implement right
RISK/REWARD

[BlackPeter]

Remember Orion started 20 years ago developing their software and predominately used their own cash flow to finance this development.This is no mean feat IMHO They aren't some one hit wonder/Novapay debacle again !
They now have operations in 26 countries with the major users being in the USA.I would imagine it would be the hardest sell/critical in the USA than any other country in the world.Their is no way it would be able to pull the wool over anyone's eyes there!Even in Turkey ,I would suggest one of the most least likely countries in the world,a new hospital is implementing the Orion Healthcare fully integrated software system.
Yes there are other Hospital /patient software providers but why has Orion Health just carried out this IPO? I strongly suspect to keep well ahead of the pack in developing and integrating big data analysis, genomics and preventive medicine.This IS THE FUTURE OF HEALTHCARE ! Yes sales and profitability is likely to be lumpy within the next 5-6 years BUT what is it going to be like by the year 2020 ?
Some investors may question why its capitalized so high compared to PEB & Xero.I suggest it is capitalized so much higher because of Orion Health's sales record and the potential in the future growth IF they implement right
RISK/REWARD

I think you misunderstood what I wanted to say (maybe I was not clear in expressing myself?). What I meant was that even if we assume that OHE are the best (which may or may not be true), many customers have no good track record in picking the best, but pick instead software providers for reasons which have nothing to do with their particular capability in performing a specific job (which, admittedly, is not always easy to assess).

What I wanted to say is - even if OHE are the best health software solutions provider, than this might not be good enough to get them all the customers they want (due to customers looking for other qualities).

Re Risk / reward ... yes, I see what you mean. It just appears that we might have a different view of either the size of the risks or alternatively of the potential of rewards (or both). Anyway - no matter how this works out, we will never know who was right :), however we will see who's perception is prevailing in the market ... and honestly, I don't know which way this will go, though I'd expect a curve similar to XRO, PEB or DIL shaped. Just not sure at which point in the curve we are at current ;).

[Harvey Specter]

Some investors may question why its capitalized so high compared to PEB & Xero.I suggest it is capitalized so much higher because of Orion Health's sales record and the potential in the future growth IF they implement right
RISK/REWARDGentrack and DIL are probably better comparisons given all three are well established in their respective market. I think Orion looks expensive compared to DIL.

I was never going to get a good allocation (Im with ASB who apparently didn't get any) so I haven't researched in much detail. I will re-investigate once the dust settles as due to the oversubscribed nature, I expect a nice opening day bonus for those lucky to get in.

[kiora]

I think you misunderstood what I wanted to say (maybe I was not clear in expressing myself?). What I meant was that even if we assume that OHE are the best (which may or may not be true), many customers have no good track record in picking the best, but pick instead software providers for reasons which have nothing to do with their particular capability in performing a specific job (which, admittedly, is not always easy to assess).

What I wanted to say is - even if OHE are the best health software solutions provider, than this might not be good enough to get them all the customers they want (due to customers looking for other qualities).

Re Risk / reward ... yes, I see what you mean. It just appears that we might have a different view of either the size of the risks or alternatively of the potential of rewards (or both). Anyway - no matter how this works out, we will never know who was right :), however we will see who's perception is prevailing in the market ... and honestly, I don't know which way this will go, though I'd expect a curve similar to XRO, PEB or DIL shaped. Just not sure at which point in the curve we are at current ;).

Fair enough BP .I see you are from CC.The District Health Board /Hospital use the Orion Health Software.I haven't first hand knowledge how they are finding it.It would be interesting to know.Does anyone have first hand knowledge how it is performing there ? I suggest for Health Providers and Hospitals this type of software is/will be a must have for client safety reasons
As far as the potential market is Orion's is $US 50 billion and growing. XRO,PEB,DIL potential market is ???
How are the 4 of them positioned relative to their markets ???
If Orion Health have the resources(information,finances,personal) and can implement what they intend to do I suggest they will be well ahead of their competitors.A MUST HAVE in a $ US 50 billion industry
Where as XRO competitors are Inuit,MYOB,Sage etc and XRO don't have a dominant market position in USA in particular and with the financial resources of Inuit and their other competitors they won't give up too easily. Xero may win in the small medium business and in the personal financial accounting.
PEB roadblocks are getting clinicians to know the test is available firstly and then have the confidence to use the test when peoples lives are at stake.No mean feat.If it is good enough it will still take a while to get sales traction and likely may require a capital raising when the share price is depressed ???
DIL more likely to be better positioned in their target markets relative to their competitors and are getting multinational recognition similar to ORION Health
Only time will tell which trajectory each of them will take but I don't mind following the lead of Microsoft(relinquishing the software they had developed to Orion Health for nicks ,Milford Asset Management ,Telstra and Institutional Investors

[kiora]

Some "light reading' for those interested.BP it is definitely NOT another NOVAPAY !A

http://www.orionhealth.com/uk/images/documents/white-paper/National_eHealth_Initiative_White_Paper.pdf

[kiora]

Some "light reading' for those interested.BP it is definitely NOT another NOVAPAY !A

http://www.orionhealth.com/uk/images/documents/white-paper/National_eHealth_Initiative_White_Paper.pdf

[BlackPeter]

Some "light reading' for those interested.BP it is definitely NOT another NOVAPAY !A

http://www.orionhealth.com/uk/images/documents/white-paper/National_eHealth_Initiative_White_Paper.pdf

kia ora Kiora (sorry, I couldn't resist ...),

just for the record ... I never said or implied that they would deliver anything comparable to NOVAPAY's quality. I said that it is not unheard of that customers are picking cr***y systems like Novapay or INCIS instead of picking systems provided by good suppliers.

However - I am not sure, whether I would dare to draw based on the 6 page white paper you are pointing to (and which is written by OHE itself) any conclusion about their capabilities and / or the quality of what they deliver. It just tells us, that they want to play in that space - and we know that already.

A white paper is basically a sales brochure, typically produced by the marketing department of the seller. If you want to provide some evidence for the capabilities of any organisation, than you should point to independent and peer reviewed research or independent tests instead of to a sales brochure.

Sure do they say in the white paper that they know what they do - but they would do that, wouldn't they?

[kiora]

Listing 26-11-14
http://www.nbr.co.nz/article/telstra-spends-20-million-2-orion-health-ipo-bookbuild-bd-165290

[kiora]

I,m thinking $6.80 by February.Any one else hazarding a guess ? :)

[Billy Boy]

There will be a honeymoon period,
BB

[Sideshow Bob]

I,m thinking $6.80 by February.Any one else hazarding a guess ? :)

No guess but got a small allocation from a tame broker. Would think if allocations were less than 25% of the applications, then going to be some demand and some inclusion in various indices etc, meaning demand from various institutions.

Will be a male deer..........

[BlackPeter]

I,m thinking $6.80 by February.Any one else hazarding a guess ? :)

I guess a much more interesting question than what the price will be in February (still in the middle of the staging season) would be what the share is worth in two or three years from now. I expect the DIL / WYN / XRO/ PEB shaped hump, however with the price at that stage being below todays IPO price. How much below? Well, this will depend on how good (or bad) the coming results will be.

Obviously - if you expect everything to go 100% to plan, and if you expect them to keep even the promises they never made, than the share price will follow the exponential "hockey stick" (until they run out of puff) :)

[noodles]

I,m thinking $6.80 by February.Any one else hazarding a guess ? :)

Given the level of demand (and scaling), we could see $6.80 by the end of the week. A broker told me that he only got 3% of what he asked for.

DISC: Got my allocation. Thanks First NZ

[bohemian]

I did get most of what I asked for and I will add. Happy to hold for sometime.

[kiora]

My projections are
Feb 2015 $6.8
Feb 2016 $10
Feb 2017 $12
Feb 2018 $14
Feb 2019 $16
Feb 2020 $18
With risk being weighted to upside rather than downside
nb North Americans are surprised how low it was priced in the IPO

Time will tell how well Orion Health Executes but I,m happy to hold for the ride as its only 10 % of my share portfolio
Any weakness will be an opportunity to top up

[mayday]

for that cap, I would rather buy some more medibank shares next month

[dingoNZ]

Looking to open up around the $7.00 level, well done for those who managed to get in with the IPO

[whatsup]

Looking to open up around the $7.00 level, well done for those who managed to get in with the IPO any idea of actual time ?

[dingoNZ]

11am it opens

[GoldenStag]

Match price is sitting at 689c at the moment.

arrrrgh! Gosh darn my fundamental analysis hat for this IPO and refusal to buy. :(

[couta1]

Match price is sitting at 689c at the moment.

arrrrgh! Gosh darn my fundamental analysis hat for this IPO and refusal to buy. :(
Too early to tell you could be right down the track:cool:

[Joshuatree]

$6.50 open well done holders ;at this point.

[whatsup]

There will be a honeymoon period,
BB

$6.50 First sales and small drop to $6.45 !

[IAK]

$6.70 and climbing, will be interesting to see what happens in the next week or two.

[kiora]

Just about 14% of shares sold at IPO traded as existing shareholders in lock up.Very profitable first day trading for them

[noodles]

Given the level of demand (and scaling), we could see $6.80 by the end of the week. A broker told me that he only got 3% of what he asked for.

DISC: Got my allocation. Thanks First NZ

Well I got close. High was 6.79 today.

I wonder if this one will go the way of Medibank. A very strong start then drift back to listing price as stags exit?

DISC: sold today

[dingoNZ]

Got a small parcel today, will be buying over the next 3 weeks.

[kiora]

Game on for the Orion software development pipeline and the share price when its included in NZX 50 & the fundys need to buy
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11364724
http://www.stuff.co.nz/business/industries/63546827/orion-health-worth-a-cool-billion

[GoldenStag]

Game on for the Orion software development pipeline and the share price when its included in NZX 50 & the fundys need to buy
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11364724
http://www.stuff.co.nz/business/industries/63546827/orion-health-worth-a-cool-billion

For everyone who went into the IPO, I salute you.

Regarding your index comment though Kiora, I have never been able to work the liquidity and float calculations that the NZX use for inclusion into the NZ50. The rules are here I think:
https://www.nzx.com/files/static/Equity_Indices_Methodology_June_2012.pdf

I would have thought that with McCrae holding so much of the shares, that the free float calculation would exclude Orion from the index. I'm not sure but if someone with greater brain power could work the maths example here, I would be forever in their debt.

GS

[noodles]

For everyone who went into the IPO, I salute you.

Regarding your index comment though Kiora, I have never been able to work the liquidity and float calculations that the NZX use for inclusion into the NZ50. The rules are here I think:
https://www.nzx.com/files/static/Equity_Indices_Methodology_June_2012.pdf

I would have thought that with McCrae holding so much of the shares, that the free float calculation would exclude Orion from the index. I'm not sure but if someone with greater brain power could work the maths example here, I would be forever in their debt.

GS

Orion is roughly a $1billion dollar company. McCrae own roughly 50%. I think you need a market cap of around $300mill to make it onto the NZX50.

[GoldenStag]

Tx Noodles.

[Billy Boy]

There will be a honeymoon period,
BB
.
Down to $6.10 ??? Those lovers must of had there first fight !!
BB
Moral ...... DYR and never trust the media

[BlackPeter]

.
Down to $6.10 ??? Those lovers must of had there first fight !!
BB
Moral ...... DYR and never trust the media

While we are talking ... $6.00 per share, and no matching bidders left. Wondering, whether its time for me to put in my $4.00 order (planned to do that sometimes next year, but maybe Christmas comes early);)?

[Billy Boy]

While we are talking ... $6.00 per share, and no matching bidders left. Wondering, whether its time for me to put in my $4.00 order (planned to do that sometimes next year, but maybe Christmas comes early);)?
You maybe better off at $4.10.
"he wants to get back into the scratcher immediately (if not sooner).
and she want to go and get her hair done !! :confused:

When is the first half/full year reports due ???
I wonder if we will get quarterly updates ??
Maybe $4.20
BB
BB

[dingoNZ]

WHEN IS ORION HEALTH'S FISCAL YEAR END?Orion Health's fiscal year ends on March 31st.


https://www.orionhealth.com/investors/frequently-asked-questions/

Will be keeping an eye out for a 'event calendar' on their site

[RGR367]

While we are talking ... $6.00 per share, and no matching bidders left. Wondering, whether its time for me to put in my $4.00 order (planned to do that sometimes next year, but maybe Christmas comes early);)?

Wasn't our undeclared wait is for 3 months from IPO due to those escrow shares of at least 10%, if I'm not mistaken? Better if we all can wait longer for those still wanting shares on this one.


Disc: did not get any for IPO and would not be getting anytime soon

[Billy Boy]

Wasn't our undeclared wait is for 3 months from IPO due to those escrow shares of at least 10%, if I'm not mistaken? Better if we all can wait longer for those still wanting shares on this one.


Disc: did not get any for IPO and would not be getting anytime soon
With you on this one and no I have not bought in yet either.
Friday 2morrow.... Trader's will be bailing ( How's your finger nails you guys ???)
< $5.80 by close ????
Whats happened to HOOP ??.... calling Hoop
BB

[kiora]

In line with guidance
https://nzx.com/files/attachments/204711.pdf

[kiora]

http://arunsplace.com/
'Companies that can extract meaningful patterns from this incoming data will have created a powerful new kind of moat' > genome mapping & data mining.'Iinformation processing at the core of their value creation'
Who knows what the potential Moat is ? Time in the market,resources,knowledge,first mover advantage in most lucrative market/most critical & questioning market,integrating other associated players into field of influence ?
Who has the gumption ?


My projections are
Feb 2015 $6.8
Feb 2016 $10
Feb 2017 $12
Feb 2018 $14
Feb 2019 $16
Feb 2020 $18
With risk being weighted to upside rather than downside
nb North Americans are surprised how low it was priced in the IPO

Time will tell how well Orion Health Executes but I,m happy to hold for the ride as its only 10 % of my share portfolio
Any weakness will be an opportunity to top up

[BlackPeter]

My projections are
Feb 2015 $6.8
Feb 2016 $10
Feb 2017 $12
Feb 2018 $14
Feb 2019 $16
Feb 2020 $18
With risk being weighted to upside rather than downside
nb North Americans are surprised how low it was priced in the IPO

Time will tell how well Orion Health Executes but I,m happy to hold for the ride as its only 10 % of my share portfolio
Any weakness will be an opportunity to top up

Hi Kiora,

just wondering - would you like to expand on the basis for your projections? What are your revenue and margin assumptions? Do you assume that they run in 2020 still at a loss (XRO - mark II)? If not, what PE do you assume for the basis of your projection?

Did you use any existing company to model their growth - or are these projections just based on one data point (current SP) and guts feeling?

Personally - I think that they are a good company in a growth industry. However - given that they are not even able to make any predictions by themselves, I think it is for an outsider without additional information a bit brave (in lack of other PC words) to talk the SP at this stage up. 6 months ago (prior to the IPO) the share was worth $4.00 and I don't know whether this was appropriate or not. I take it you hope that the SP might keep going up (and who knows, it might for a time).

Just concerned that people might use your numbers as basis for making investment decisions ... unless, there is a solid base for them.

Otherwise - if we are here in phantasy land: the SP might be $40 in a year (doing the XRO thing) and $15 in two (hey - it might, who knows ...) or alternatively it might drop from here and following the RAK or GEN story (ending up as penny dreadful). Only sky and ground are the limits ...;)

[kiora]

Hi BP
"Only sky and ground are the limits ...undefined" as you say
My 'assumptions' are based on their past performance,my assessment of the industry they are in,my assessment of their position in their industry and discussing these assessments with people in their industry.
My assessment is that their T/O trend will continue in the current trajectory,the profit will depend on Orion Health being able to moneterise their big data analysis along with Health Management and of course what they are prepared to invest & rate of investment on development in relation to their income
As you say ,DYOR
For me I,m happy to invest 10% of my portfolio for the RISK/REWARD that ORION HEALTH offers and not to be personally concerned their not wishing to outline their predictions as some other investors are inclined to do

[kiora]

Here is someone who is thinking about the' Health Space'
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11370171
https://www.linkedin.com/company/life-letters?trk=prof-following-company-logo
https://www.linkedin.com/company/one-disease?trk=prof-following-company-logo

'In 2010, he set up the charity One Disease, working with indigenous Australian communities to help eradicate scabies. And his most recent project, Life Letters, has been set up to help people understand the role genetics plays in their makeup and help with early identification of illness.

Prince says the recent developments in genetics have unlocked huge potential for preventive, personalised medicine.

Life Letters aims to harness the power in this knowledge to improve health outcomes for people across the world.

"Correct and responsible understanding of individual genomes could be used to predict cancer, and prevent disease. We have Nobel Prize winners on our board; Life Letters is set to launch in Asia next year and we are predicting it could soon become one of the biggest businesses in Australia."

[Bilbo]

With you on this one and no I have not bought in yet either.
Friday 2morrow.... Trader's will be bailing ( How's your finger nails you guys ???)
< $5.80 by close ????
Whats happened to HOOP ??.... calling Hoop
BB

Anyone got Orion on their target list and if so at what price will you start buying. Looks like it could fall below IPO price today as latest trade at 5.80 and few sellers with top being 200 shares at 5.72. Not looking good for the short term given the escrow that expires 3 months from IPO. I thought IPO was overpriced so stayed away, even though I have followed Orion closely over the years and had intended to invest. Their indicative pricing was $4.30 to $5.70, so for me I'd want to see something closer to the middle of that range before being tempted, unless things change with the outlook. Interested in others thoughts regarding timing and price target for entry.

[BlackPeter]

Anyone got Orion on their target list and if so at what price will you start buying. Looks like it could fall below IPO price today as latest trade at 5.80 and few sellers with top being 200 shares at 5.72. Not looking good for the short term given the escrow that expires 3 months from IPO. I thought IPO was overpriced so stayed away, even though I have followed Orion closely over the years and had intended to invest. Their indicative pricing was $4.30 to $5.70, so for me I'd want to see something closer to the middle of that range before being tempted, unless things change with the outlook. Interested in others thoughts regarding timing and price target for entry.

I think they need to get really low (around $4.00) to be tempting for me at this stage. Likely to wait until the ESCROW period ends later in Q1/2015. But then - I might miss a bargain for not buying now, or get a bigger bargain later on - who knows?

[whatsup]

Anyone got Orion on their target list and if so at what price will you start buying. Looks like it could fall below IPO price today as latest trade at 5.80 and few sellers with top being 200 shares at 5.72. Not looking good for the short term given the escrow that expires 3 months from IPO. I thought IPO was overpriced so stayed away, even though I have followed Orion closely over the years and had intended to invest. Their indicative pricing was $4.30 to $5.70, so for me I'd want to see something closer to the middle of that range before being tempted, unless things change with the outlook. Interested in others thoughts regarding timing and price target for entry.


Im interested but will wait for the next full year accounts to see how the company preforms post listing. Im interested BUT .... !

[IAK]

Is this anything to worry about? Orion faces hitch in USA.

http://www.stuff.co.nz/timaru-herald/business/64435820/NZ-made-software-faces-hitch-in-US

[BlackPeter]

Is this anything to worry about? Orion faces hitch in USA.

http://www.stuff.co.nz/timaru-herald/business/64435820/NZ-made-software-faces-hitch-in-US

Wow - given that their growth is basically fully reliant on the US market ... Yes, this is clearly something for them to worry about -unless they manage to address the privacy concerns pronto. Might explain the tanking of the SP ...

[Harvey Specter]

The privacy issues are purely to do with how the purchaser of the system want it set up. Orion could lock it down fully or open it up.

Not a big issue in my opinion as those that spent the $80m won't want it to be opt in!

[winner69]

Cal Index news search generally positive but doesnt take too many 'bad stories' to get people upset, even if the problem is the users

Like this women

http://www.worldprivacyforum.org/2014/11/some-californians-receive-emails-from-health-insurer-with-personal-details-exposed-potential-calindex-implications/

[winner69]

Wow - given that their growth is basically fully reliant on the US market ... Yes, this is clearly something for them to worry about -unless they manage to address the privacy concerns pronto. Might explain the tanking of the SP ...

Wouldn't say the share price is actually "tanking"

[BlackPeter]

Wouldn't say the share price is actually "tanking"

O.K. - don't intend to get into a lengthy discussion around the meaning of "tanking" ... I admit, there are lots of definitions depending on the context, and I agree that many of them sound more serious than what I had in mind:

what I found as meaning of "tanking" after a brief Google search:

1) to put or keep in a tank
2) to move like a tank, esp heavily and rapidly
3) to defeat heavily
4) to fail, esp commercially
5) to fail intentionally (part in sports)
6) A security, sector or market is said to "be tanking" while it is on its way down (from Investopedia).

What I had in mind was definition number 6 ... OHE is going down for the last couple of weeks - and nearly back to its IPO price.

However (not just) in the spirit of the season more than happy to see you replacing the verb "tanking" with another verb which (in your view) better describes the price trend. Any proposals?

[RGR367]

..................
However (not just) in the spirit of the season more than happy to see you replacing the verb "tanking" with another verb which (in your view) better describes the price trend. Any proposals?

Not a verb for I'll just say it's on a xmas break that count extend up to easter holiday :)

[kiora]

More on the importance of Genomics
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11379312
Regarding privacy issues raised on ST
Will individuals really decide that their privacy on line is more important than their health ?
Maybe the health professionals will need to educate their patients on its importance.
Individual genomics is less important,group genomics will be more important.The issue will be who owns this information and can access it
For the health insurers it is all about risk.I would suggest they will limit their cover depending on the individuals genomics.If individuals opt out then it seems logical they will get reduced cover ?

[kiora]

More on the importance of Genomics
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11379312
Regarding privacy issues raised on ST
Will individuals really decide that their privacy on line is more important than their health ?
Maybe the health professionals will need to educate their patients on its importance.
Individual genomics is less important,group genomics will be more important.The issue will be who owns this information and can access it
For the health insurers it is all about risk.I would suggest they will limit their cover depending on the individuals genomics.If individuals opt out then it seems logical they will get reduced cover ?

[Zaphod]

For the health insurers it is all about risk.I would suggest they will limit their cover depending on the individuals genomics.If individuals opt out then it seems logical they will get reduced cover ?

Slightly OT, but this is going to be a major social issue in the future; do we allow insurance companies such as ACC, SouthernCross etc. to discriminate based on genetic markers, or is the current system acceptable? Given we do not fully understand the interplay between seemingly unrelated genes, embarking on such a programme at this juncture is dangerous.

[kiora]

Why would it be OT Zaphod?
Don't health insurers already 'discriminate' /have differential premiums based on health records & age ?
Isn't it all about risk & user pays ?
Regarding understanding the interplay between seemingly unrelated genes that is what I understand what the Orion Health software will enable the different interest groups to investigate.

[Zaphod]

Why would it be OT Zaphod?
Don't health insurers already 'discriminate' /have differential premiums based on health records & age ?
Isn't it all about risk & user pays ?
Regarding understanding the interplay between seemingly unrelated genes that is what I understand what the Orion Health software will enable the different interest groups to investigate.

Yes, insurance companies do discriminate on this basis and are granted an exemption in NZ under the Human Rights Act to do so, however this type of discrimination occurs at a very high level (e.g. age bands) and is generally viewed by society as acceptable. Discrimination at the much lower genetic level, especially when based upon an incomplete understanding of the interplay of genes, raises a number of social issues that could even affect participation in genetic research itself.

Acts have been passed in many jurisdictions across the world banning such discrimination, but not in NZ.

[GoldenStag]

Surely the forex change recently would more than compensate for any lower receipts?

[winner69]

Quarterly reporting a bugger eh

Hope $25m cash burn a quarter doesn't last too long

[noodles]

Quarterly reporting a bugger eh

Hope $25m cash burn a quarter doesn't last too long

Market cap has dropped below $900mill. Is Drury richer now? Who cares. But I would have thought the first major announcement would have been better than this.

[Joshuatree]

Is this why they refused to give forecast in the IPO.

[RGR367]

this one made me laugh - the depth screen from a moment ago - some guy offering to buy 100000 shares at 10c each makes in onto the screen....






Buyers

Buy Quantity

Prices



3

6,500

$5.200



1

270

$5.180



2

1,500

$5.150



1

1,500

$5.120



5

5,150

$5.100



1

1,800

$5.010



2

5,000

$5.000



1

4,000

$4.750



1

1,500

$4.000



1

100,000

$0.100





We could be joining that lone buyer of 1,500 at $4.00 around Easter, I reckon :) Who said that reading tea leaves cannot be used on this stock :t_down:

[BFG]

Quarterly reporting a bugger eh

Hope $25m cash burn a quarter doesn't last too long

Exactly. If it wasn't ASX listed this fiasco would have gone on another 3 months with no one knowing any better here in NZ.

GET YOUR ACT TOGETHER NZX!!!

Disc - Not holding, but could be in for yet another dead kitty pavement bounce :)

[whatsup]

Im interested but will wait for the next full year accounts to see how the company preforms post listing. Im interested BUT .... !


See what I mean, now what was the issue price to investors again ?

[winner69]

Anybody listen in conference call

Share price seems to have fallen more since .. Nobody believe the excuses?

[winner69]

Down 15% now and getting worse. I had a listen to the conference call this morning - unimpressed with the arrogant tone.

I think we 'don't just get it' bk

If we did things be honky dory

[winner69]

Very interesting comments from some of the analysts - I think a number were genuinely shocked at the cash burn rate.

Suppose hey were, after all nearly 25% of cash raised has gone

Oh well, all honky dory, there's $96m to go

(Last quarter cash burn $27m)

[sb9]

Hmmm..so much for the IPO of 2014, what an anti-climax :t_down:

[whatsup]

From Market analysis James Cornell

Orion Health Group Ltd, a software company established 21 years ago, is seeking to raise $120 million in new cash from the issue of 21.1 - 27.9 million new shares at a price of 430-570 cents per share.

Existing shareholders will also sell $5.0 million worth of shares (i.e. 0.9-1.2 million shares) to the public in the Initial Public Offering.

Orion Health Group was a profitable business through to March 2013, earning a net profit of $7,750,000 but since 2012 has been “strategically focused on aggressively growing market share” in the United States, which has “required us to scale our delivery at a speed which has generated challenges, which in turn has adversely impacted our margins in the short term”.

In other words, they have had to spend a lot more on Research & Development and on Sales & Marketing to grow in a very competitive market. Expenses have increased faster than revenues and the business has become unprofitable.

Why would you want to buy into a company that had been “adversely impacted” by events? Perhaps because that might depress the share price and offer a low buying opportunity? Well, that does happen on the stockmarket, but not in the IPO market!

How “adversely” has Orion Health Group been impacted? Judge for yourself. The prospectus uses the word “adversely” no less than 42 times. Investors may be a little “adverse” to invest in a company with that many problems.

So lets look at some valuation statistics.

The market capitalisation after this Initial Public Offering will be around $720-915 million (depending upon the issue price of the shares). That is 93-118 times the net profit earned in 2013 (i.e. a P/E of 93-118) but the company became unprofitable in the year to March 2014 with a loss of $1,137,000. In the half year to 30 September, the company lost $14,756,000. Unfortunately, there is no suggestion that the company will return to profitability in the foreseeable future!

At least the brokers selling this IPO don't have to worry about a ridiculously high P/E ratio - but perhaps investors should worry.

Annual revenues to March 2014 were $153.0 million. Only 29% were recurring revenues, although these will increase in the future as the company moves from one-off, upfront, perpetual software sales to recurring annual Software as a Servicerevenues. Unfortunately this transition adversely - yes, that word again - impacts on revenue growth and profitability in the short to medium term.

We like software companies but profitable software companies can be purchased on Price/Sales ratios of 3-5½ (or lower). Orion Health Group's $720-915 million market capitalisation is a Price/Sales ratio of 4.7-6.0. That looks a little expensive, especially as most revenue growth has been from lower margin “implementation services” and “managed services” while high margin “perpetual licence” revenues will decline significantly (i.e. from more than 30% of revenue to just “10-15%” over the “medium term”).

For an unprofitable software company, we might be more interested at a P/S of 2-3. That would value the shares at about halftheir proposed IPO price.


Summary and Recommendation

Software is a great business, especially companies (like Integrated Research and Technology One) that can finance Research & Development (to improve and expand their services) and Sales & Marketing (to win new customers) out of revenues to generate profitable growth and also pay dividends!



Unprofitable software companies involve much higher risks, so are less attractive for investment. Logic is inverted when they are priced at a higher valuation. Why would investors pay more for a company that fails to earn a profit and is unable to finance its growth from internally generated cashflows?

So Orion Health Care may be a great company, but at a high valuation and with an unprofitable business it is not something we shall be buying for our portfolio.


Very interesting reading in hind sight !!!

[BlackPeter]

24-11-2014:

I,m thinking $6.80 by February.Any one else hazarding a guess ? :)

I remember I questioned your estimate at the time ... still expecting such a stellar recovery?

[GoldenStag]

Looks like my IPO comparison with GTK was more similar than I realised; now including the obligatory post IPO bad news soon after listing and share dive.

[Schrodinger]

24-11-2014:


I remember I questioned your estimate at the time ... still expecting such a stellar recovery?

Raised a few eyebrows when they refused to nominate a forecast. First IPO I can remember that has done that. A forecast however bull**** is a useful yardstick to measure the trust levels to afford directors. Unless you are an evangelist or a lifer it should be a requirement for assessment. Don't know much about Orion's strategy as I stayed clear due to various factors but some indication of when it is likely to hit profitability would be extremely useful. Relying on pure capital gains has its risks when the growth music stops.

[whatsup]

From Market analysis James Cornell

Orion Health Group Ltd, a software company established 21 years ago, is seeking to raise $120 million in new cash from the issue of 21.1 - 27.9 million new shares at a price of 430-570 cents per share.

Existing shareholders will also sell $5.0 million worth of shares (i.e. 0.9-1.2 million shares) to the public in the Initial Public Offering.

Orion Health Group was a profitable business through to March 2013, earning a net profit of $7,750,000 but since 2012 has been “strategically focused on aggressively growing market share” in the United States, which has “required us to scale our delivery at a speed which has generated challenges, which in turn has adversely impacted our margins in the short term”.

In other words, they have had to spend a lot more on Research & Development and on Sales & Marketing to grow in a very competitive market. Expenses have increased faster than revenues and the business has become unprofitable.

Why would you want to buy into a company that had been “adversely impacted” by events? Perhaps because that might depress the share price and offer a low buying opportunity? Well, that does happen on the stockmarket, but not in the IPO market!

How “adversely” has Orion Health Group been impacted? Judge for yourself. The prospectus uses the word “adversely” no less than 42 times. Investors may be a little “adverse” to invest in a company with that many problems.

So lets look at some valuation statistics.

The market capitalisation after this Initial Public Offering will be around $720-915 million (depending upon the issue price of the shares). That is 93-118 times the net profit earned in 2013 (i.e. a P/E of 93-118) but the company became unprofitable in the year to March 2014 with a loss of $1,137,000. In the half year to 30 September, the company lost $14,756,000. Unfortunately, there is no suggestion that the company will return to profitability in the foreseeable future!

At least the brokers selling this IPO don't have to worry about a ridiculously high P/E ratio - but perhaps investors should worry.

Annual revenues to March 2014 were $153.0 million. Only 29% were recurring revenues, although these will increase in the future as the company moves from one-off, upfront, perpetual software sales to recurring annual Software as a Servicerevenues. Unfortunately this transition adversely - yes, that word again - impacts on revenue growth and profitability in the short to medium term.

We like software companies but profitable software companies can be purchased on Price/Sales ratios of 3-5½ (or lower). Orion Health Group's $720-915 million market capitalisation is a Price/Sales ratio of 4.7-6.0. That looks a little expensive, especially as most revenue growth has been from lower margin “implementation services” and “managed services” while high margin “perpetual licence” revenues will decline significantly (i.e. from more than 30% of revenue to just “10-15%” over the “medium term”).

For an unprofitable software company, we might be more interested at a P/S of 2-3. That would value the shares at about halftheir proposed IPO price.


Summary and Recommendation

Software is a great business, especially companies (like Integrated Research and Technology One) that can finance Research & Development (to improve and expand their services) and Sales & Marketing (to win new customers) out of revenues to generate profitable growth and also pay dividends!



Unprofitable software companies involve much higher risks, so are less attractive for investment. Logic is inverted when they are priced at a higher valuation. Why would investors pay more for a company that fails to earn a profit and is unable to finance its growth from internally generated cashflows?

So Orion Health Care may be a great company, but at a high valuation and with an unprofitable business it is not something we shall be buying for our portfolio.

From my reading of this comment I would say IMHO that if Orion were not able to have raised money via the IOP process it would have gone broke its bleeding money now that it didn't have access to before and how long can this carry on ?

[kiora]

24-11-2014:


I remember I questioned your estimate at the time ... still expecting such a stellar recovery?

Hard to see it now BP,the naysayers are having a field day !

[Crystal Ball]

Hard to see it now BP,the naysayers are having a field day !
They are indeed kiora, but I would say with good reason, unfortunately.....
looked into buying these shares but a few things did make me doubt and when I am not sure, I would rather wait and see. I think this is going to be a of a bumpy ride for shareholders, hope I am wrong for their sake....

[Lola]

:scared:
Whole thing has the potential to turn into a reasonibly significant debacle.
Could OHE be FTX #2?
Surely not.

[biker]

Which brokers were principals for the IPO?

[Beagle]

If someone put a gun to my head, (you'd have to because I wouldn't buy either), and said would you buy this or XRO ? I'd choose XRO in a heartbeat. At least that has genuine dynamic growth and is substantially made up of recurring business regardless of how over-priced it may be. I find it peculiar that such a small float would seek a dual listing with all the extra costs that incurs and the size of the company's loss $14.8m for the six months to 30 September 2014 on turnover of only $80m looks like a real worry especially seeing as how the company has been profitable before. How is it that the company has been able to grow at 25-30% growth in the past while remaining profitable.
All the low hanging fruit in this niche health sector already picked ? Floating a pup with little to no chance of making any money in the foreseeable future ?
Current growth rates slowing despite massive increase in new staff hire ? Pricing in the next six years prospective growth that may or may not happen into the present IPO price like reestablishment of consistent 30% growth in future years is a given ?Have we got another Hirepool on our hands with a blatantly greedy promoter ?

What would a silly old conservative accountant know, posted 28 October :) Looked like a real DOG then and looks like a really SICK DOG now.

[winner69]

So the adverse impact this time was the iphone effect

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11394467

Adverse 42 times in the prospectus .....must be more to cone

[winner69]

So this March quarter not going to be too flash either

While receipts from customers are traditionally slower in the third quarter of each financial year they were lower than expected in the third quarter of FY 2015 due to slower contract closures and billings in North America. Management expect this trend to continue in the fourth quarter of FY 2015. In addition receipts from customers were adversely affected by the on-going planned transition from perpetual licences to subscription contracts.