Published on the 28/11/2014 | Written by Newsdesk
As Orion Health joins the growing ranks of New Zealand technology companies listed on the stock exchange to great fanfare, it pays to remember that it’s not all plain sailing – just ask Gentrack…
Orion Health, which until this week was New Zealand’s largest independently owned health software company, has listed on the NZX and the ASX trading with the ticker OHE. Founder and CEO Ian McCrae said at the company’s 20th birthday celebrations last year that Orion would explore an IPO when the time was right.
Shares of Orion Health Group Limited began trading on the NZX Main Board and ASX on Wednesday, following a successful IPO that raised $125 million, including $120 million in new capital. The capital raised by the IPO will be used to boost the company’s R&D as it makes a large growth push into international markets such as the United States and UK.
A release posted to the NZX said strong demand for the shares saw them priced at $5.70, at the top of the indicative price range of $4.30-$5.70. By Thursday morning the share price had soared to $6.35, giving the company a market capitalisation of more than $1 billion dollars on its second day of trading. Shares have since dropped to $6.00 leaving the company’s market capitalisation hovering just below the $1 billion mark.
Orion Health Chairman Andrew Ferrier said the company was delighted to have attracted the strong support of all its new shareholders. “At Orion Health we are now well equipped with the necessary resources to invest in further research and development to capture these once in a generation opportunities.”
It’s early days, however, for the company, which has set itself large growth targets and plans to double its workforce to pursue its research and development including in mobile and big data-related technologies. The 350-odd new jobs will be mainly based in New Zealand.
The stock market can be a fickle thing, as proven by another New Zealand technology company Gentrack [NZX: GTK], which develops utilities and airports software and listed on the NZX in June. It had a bumpy debut on the stock market and its share price is still trading 35 cents below its listing price. This week it posted a 49 percent drop in annual profit, although its profitable UK business grew by 40 percent, and finished the year with a $5.2m cash balance. In August the company was forced to downgrade its profit projections just five weeks after its IPO, and while the announced profit was above the new range of $2.5 million to $2.8 million it was still $360,000 below its prospectus forecast of $3.7 million.
However, according to the NBR, Gentrack Group chairman John Clifford said the software company’s share price will take care of itself once it starts delivering projected profits over time, adding that “it’s a long game”.
Clifford blamed the poor results on a high dollar and two disclosed contract issues but said that the company is still in line to deliver solid growth in the year to 30 September 2015 with a 16 percent increase in revenue to $44.7 million. This will require the company to win several new projects in the first half of the year but Clifford says there is a healthy pipeline of opportunities available. Investors seem heartened by this message as shares were up 4.19% at the time of publishing.
