Orion Health cuts 177 jobs amid losses

Auckland health software firm Orion Health has revealed it has cut 177 jobs since March as it seeks to stem its losses.

Orion Health once rivalled Xero as one of the country’s top technology successes and at its peak employed 1200 people in New Zealand and overseas.

But investors who bought into its 2014 sharemarket float would now have lost almost 90 per cent of their money.

Orion’s cuts come amid expectations of further job losses in the hi-tech sector at Spark.

Spark said on Monday that it expected to see its labour bill fall by almost a fifth over the

18 months between last June and this December – supporting speculation early last year that it was planning for the loss of about

1000 jobs, a proportion of which are believed to have already gone.

Reporting Orion Health’s annual result, chief executive Iain McCrae said the company had been affected by changes to Obamacare funding in the United States that had forced some of its customers there to retrench.

Orion Health reported a loss of

$40 million in the year to the end of March, up from a loss of $34m the previous year, with revenues down 14 per cent to $170m.

Slides shown by the company during its results presentation showed it cut the number of fulltime employees in its loss-making population health and hospitals divisions by 173 staff members, to

659, between March 1 and Monday this week.

Another four jobs were cut from its core Rhapsody division, which helps healthcare providers pull together patient data from different sources.

Chairman Andrew Ferrier said Orion Health was making progress with a ‘‘strategic review’’ that some think could involve a partial trade sale.

‘‘Work on due diligence and structure is largely complete. However, until any final agreement is reached we can’t give any certainty on the nature or terms of any transaction,’’ he said.

Craigs Investment Partners analyst Steven Ridgewell said it would be fair to say it was a ‘‘disappointing year for Orion and its shareholders’’.

It was unclear what kind of deal Orion Health was working on – for example, whether it might be a full sale of the company or a partial sale, he said.

But he said there might be strong interest from buyers in Orion Health’s Rhapsody division, which employs 130 staff members, and which was the firm’s ‘‘crown jewels’’ and could be quite easy to separate.

‘‘It is a very good product, profitable and growing at 10 per cent a year. Then you have got the other divisions, which are burning a lot of a cash,’’ Ridgewell said.

‘‘My preference would be that they hold on to Rhapsody and wind down the rest of it – or at least focus on the areas where they can make money.’’

Orion Health’s US expansion had gone off the rails and it had ‘‘over-extended’’ with too many moonshots, he said.

‘‘It is quite a big business and there are highly profitable parts and they can restructure to survive. But it is obviously a painful process for all concerned: staff, shareholders and, I am sure, the board as well.’’

Orion Health chief financial officer Mark Tisdel forecast ‘‘flat’’ to slightly increased revenues this financial year, and a slight loss or break-even result.