By Paul McBeth
Dec. 3 (BusinessDesk) – Orion Health will pay up to $144.6 million buying back shares from investors in the healthcare
technology firm that struggled to achieve the big aspirations it had when it went public four years ago.
The firm will pay $1.224 a share, around the mid-point of its last estimated range to $1.20-to-$1.25. Shareholders can
opt to hang on to some or all of their shares, with Orion Health offering to buy 20, 50 or 100 percent of an investor's
stake. Chief executive Ian McCrae will sell 20 percent of his holding.
The buyback formed a component of Orion's wider transformation, in which it sold its profitable Rhapsody unit to UK
private equity firm for $205 million, diluted its holding in the population health management division and retained full
ownership of the hospitals unit.
"The board has considered Orion Health’s available cash immediately following completion of the Hg transaction, taking
into account transaction costs and working capital adjustments in relation to the Rhapsody sale, and the ongoing
requirements of Orion Health’s hospitals business," the company said in a statement.
The buyback is a small premium to the $1.17 trading price but will crystallise losses for investors in the 2014 initial
public offering who paid $5.70 a share. Craigs Investment Partners analyst Stephen Ridgewell last week recommended
shareholders accept the offer, saying it would take a substantial improvement to turnaround Orion Health's remaining
businesses.
The company had been profitable in private ownership but sought to accelerate global growth by raising funds from the
public, while also changing to a subscription model from one-off perpetual licensing.
The Kiwi firm had hoped to profit from the previous US administration's Affordable Healthcare Act, known as Obamacare,
which poured billions of federal government dollars into the wider US health sector. However, that flagship policy of
Barack Obama's presidency was strongly opposed by the Republican Party and changes to the law forced many of Orion's
customers to cancel orders when their own funding ran out.
Orion shareholders overwhelmingly backed the restructuring proposals at this year's annual meeting, although many vented
their frustrations with the company's performance and chair Andrew Ferrier and McCrae shared their disappointment with
its predicament.
Investors on the register on Nov. 30 can accept the buyback between Dec. 6 and Jan. 11.
McCrae will end up with between 44 percent of the company he founded if no-one participates and 100 percent if everyone
sells. If he ends up with 90 percent or more he will have to either enforce Takeovers Code mop-up provisions or give the
remaining shareholders the ability to sell to him. McCrae has yet to say whether he'll de-list Orion from the NZX if
more shareholders decide to stick with the company.
(BusinessDesk)
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