FY2016 Annual Report FY2016 Annual Report Download

89 Pages·2016·12.48 MB·English

Contents
Chairman and CEO Report 08
Platform for Precision Medicine 14
Financial Performance 17
Board of Directors 30
Directors’ Responsibility Statement 32
Independent Auditor's Report 33
Financial Statements 35
Corporate Governance 75
Shareholder Information 82
Directory 89

6 2016 Annual Report / Orion Health at a Glance
Orion Health at a Glance

Precision medicine platform
Our world-leading precision medicine platform, Orion
Health Amadeus, is a big data cloud hosted solution, at
the epicentre of a global transformation in health.
Over 100m patient health records
We have surpassed the significant milestone of 100m
patient health records managed by our software. We
support over 20% of a population's personal health records
in strategic countries such as the United Kingdom, Spain,
Canada, Australia and New Zealand.
Moving to the cloud
In five years’ time patient health records, because of size
and complexity, will be stored in the cloud. Orion Health
is now planning to upgrade many of our customer’s
systems to our cloud-based platform Amadeus using the
latest in modern technology.
A growing global footprint
Our impressive list of leading health innovators around
the globe continues to expand with eight new significant
customer contracts announced in the first four months of
2016.
2016 Annual Report / Orion Health at a Glance 7
Revenue growth
Revenue for FY2016 was $207m, a 26% increase on
the previous financial year.
Driving to profitability
$
We expect to be profitable during FY2018 as a result
of growing revenues, reduced operating costs and R&D
becoming a reducing percentage of total revenues.
High performing team
We employ more than 1200 people in 24 offices in 15
countries. Over the past 12 months the calibre of our
management team has continued to grow with new
leadership in the U.S. and United Kingdom.
$38m research project
We are partnering with the University of Auckland and
the Waitemata District Health Board, with support from
the Ministry of Business, Innovation and Employment,
on a $38m research programme in the new area of
precision medicine.
IAN MCCRAE
Founder and CEO
Chairman and On behalf of your board of directors, we are pleased to
present to our shareholders the annual report for Orion
Health, for the year ended 31 March 2016.
CEO Report
It has been a year of progress for Orion Health on many
fronts. We have delivered strong revenue growth and
invested in a significant research and development
(R&D) project with the launch of the Amadeus precision
medicine platform. We have continued with our push to
significantly upgrade our people and capability, and have
made a number of important appointments.
We have substantially increased our global footprint by
expanding into new markets, notably France and Vietnam.
At the same time we have revitalised our presence in
existing markets such as the United States and Australia
by establishing new partnerships with healthcare
providers and insurers.
In this financial year we generated revenue of $207m,
which is 26% up on the previous year. Our recurring
revenue was $88m, representing 42% of Operating
Revenue, an increase of $34m from FY2015. As a
company we are driving to profitability during FY2018,
and targeting revenue growth of over 20% in the coming
financial year.
ANDREW FERRIER
Chairman
We are delighted to report our software now manages This revolution in healthcare is known as precision
over 100m patient health records (PHR) globally. This is a medicine, a development being championed by
powerful position for our company to be in as the health governments around the world, most notably by US
sector begins to experience major disruption through President Barack Obama through the Precision
new technology. Cloud computing and big data will have Medicine Initiative. Orion Health is positioned for
as significant an impact on healthcare delivery as these first mover advantage in this exciting area of medical
technologies have had on the retail and media sectors. advancement. We are being sought out by industry
In five years we anticipate that the majority of PHRs will leaders, such as the giant global software vendor
be stored in the cloud and a vibrant ecosystem will exist, Cognizant, to form strategic alliances. Our new
enabling a variety of apps from both Orion Health and technology on which Amadeus has been built is the
accredited third parties. PHRs created in our software will first of its kind and is unrivalled by our competitors.
co-exist and inter-operate with other systems to manage
healthcare processes.
The Orion Health Amadeus precision medicine platform,
We are delighted to
launched in December 2015, enables us to capture,
store and deliver many new and traditional healthcare
report our software now
data types. Today that is the patient’s medical record;
but soon it will include information about the patient’s manages over 100m patient
genetic makeup, their personal device data and their
environmental and social circumstances. This information health records globally. This
will be critical as medicine and healthcare delivery moves
into the age of data, when the delivery of targeted, is a powerful position for our
personalised healthcare will rely on clinicians having
company to be in...
access in real time to vast quantities of information about
their patients.
10 2016 Annual Report / Chairman and CEO Report
Driving to profitability

Orion Health has an opportunity pipeline that combines primary health providers, pharmacies, governments
the confidence of new business together with a growing and specialists. We aim to support over 20% of a
recurring revenue base, to support revenue growth population’s personal health records in strategic countries
targets of 20% or more in the coming financial year. to ensure Orion Health has a meaningful role in the
evolution of that country’s health system. This has been
With the launch of the Amadeus precision medicine achieved in the United Kingdom, Spain, Canada, New
platform, Orion Health’s R&D capabilities remain a point Zealand and Australia.
of difference. While our investment in R&D increased by
26% in FY2016, we will see a gradual decline in this We continue to be successful in seeking out new
spend as a proportion of total revenue going forward. opportunities. In June 2015 we signed a contract to deliver
our Enterprise software solution for Vietnam’s Vinmec
International Hospital. The deployment of the first of their
four major hospitals was completed in just seven months,
Based on revenue growth
with the hospital opening on 26 December 2015.
expectations, R&D
In January 2016 we entered the French market at a
strategic level, being appointed as a partner in two
expenditure, efficiencies in
major pilot projects aimed at transforming the country’s
product deployment and the healthcare system from a hospital-centric to a patient-
centric model. If the pilots are extended into full
benefits of restructuring in programmes, Orion Health will reach 15m people, which
is around 20% of France’s population.
our U.S. business, we expect
We had our first successful deployment of Amadeus in
to achieve profitability
Europe when Orion Health won a procurement contract in
Spain. We will deploy our precision medicine platform for
during FY2018.
a public healthcare provider in the Castilla y Leon province
to support the health records of more than 2.5m people.
We had a challenging year in the U.S. and after
We continue to adopt a subscription/SaaS (Software as a restructuring we are now positioned for profitable future
Service) business model. This provides the company with growth. We are seeing rejuvenated momentum through
a platform for growth and increased recurring revenue the agreement with Horizon Healthcare Services Inc, a
and it reduces cash and earnings volatility. At the same large insurer based in New Jersey, to deliver the Orion
time we are standardising products globally and making Health Amadeus precision medicine platform for its
them easier to deploy, providing speed to value for our membership base of over 3.8m. In addition, Orion Health
customers. Next year we will begin moving many existing was appointed the integration and interoperability partner
customers who are currently hosted by disparate systems as a member of the Leidos syndicate’s major contract with
onto the cloud-based Amadeus precision medicine the U.S. Department of Defence, and signed a strategic
platform, which will shed costs and deliver greater scale. partnership with Cognizant.
Based on revenue growth expectations, R&D expenditure, Our presence in Australia has been significantly boosted
efficiencies in product deployment and the benefits as Orion Health’s Rhapsody Integration Engine was
of restructuring in our U.S. business, we expect to chosen to become Queensland Health’s interoperability
achieve profitability during FY2018. We believe we have platform. Queensland Health is responsible for a public
sufficient funds and facilities to execute our strategy until health system servicing over 4.8m people, and this
profit and positive cashflow is generated. contract is the first stage in the transformation of its IT
infrastructure. Through the interoperability platform,
Winning global business Orion Health was able to sign an agreement with Metro
Orion Health actively pursues a global footprint and North, the largest and most diverse health service in
leverages expertise and knowledge across our three Queensland which serves over 900,000 people, to deliver
regions – EMEA (Europe, Middle East and Africa), NA a ground-breaking Referrals Management platform.
(North America) and APAC (Asia Pacific). Our presence in
established markets continued to expand throughout the We continued to see strong growth in the United
year, most notably in Canada, Australia and the United Kingdom, recently winning a competitive bid to provide
Kingdom. Our customers include hospitals, publicly a comprehensive technology solution for two leading
funded health bodies, private hospitals, health insurers, London hospitals which support 1m patients.
2016 Annual Report / Chairman and CEO Report 11
Orion Health also moved into a new adjacent market Technology leadership
segment when it signed an agreement with retail
Partnering with the global software giant Cognizant and
pharmacy chain Boots United Kingdom Limited, a member
securing a contract with the major U.S. insurer Horizon
of the Walgreens Boots Alliance. Orion Health technology
Healthcare Services, Inc. constitute important business
will be used to support community pharmacists in the
confidence in Orion Health’s technology roadmap, and in
delivery of in-store clinical services which have previously
particular the Amadeus precision medicine platform.
been provided on paper and in a variety of IT systems.
Orion Health's technology is designed to take
We also extended our offering to existing clients with
advantage of cloud and big data opportunities.
the sale of Orion Health Medicines to the United
We are moving towards offering standard, modular
Kingdom’s largest healthcare provider, NHS Greater
solutions, which not only attract new customers, but
Glasgow and Clyde. Orion Health Medicines is a new
enable us to increase our offering to existing customers.
solution that was launched in 2015 and reconciles the
While our focus remains on our platform and embedding it
complete list of medicines that a patient is prescribed,
far and wide, our comprehensive software solution means
together with any over-the-counter drugs and alternative
that we can cater to customers at different stages of their
remedies they may have purchased.
healthcare IT journey. We continue to concentrate our
in-hospital Enterprise solution on the South-East Asian
market, while the rest of our solutions cater to markets
that are focussed on population health management,
The opportunities in
evolving towards delivering precision medicine.
partnering with Cognizant
In the coming year we will continue our focus on mobile
are immense. Most notably applications that will increasingly enable consumers to
take charge of their own health outcomes. We will also
the company’s software provide the ability for accredited, third-party applications
to access Orion Health technology. Amadeus is an
manages health insurance open platform that provides the ability for different
applications and vendors to operate in both the capture
claims and administration
and the delivery of real-time data.
for 190m people.
Key to the success of the precision medicine vision is the
ability to make sense of the vast amounts of data that
are being ingested and stored by the Amadeus platform.
Developing and extending the analytics layer of Amadeus
will be a focus for our development team in the coming
Strategic alliance
year. We believe that New Zealand can be a world leader
We formed a strategic alliance with the Cognizant in this area, and we are working with local healthcare
Group to deploy the Amadeus precision medicine providers and the universities, with support from the
platform. Cognizant is a large provider of software and New Zealand government, to bring machine learning and
services to U.S. health insurers. It is a Fortune 500 cognitive support to healthcare.
software vendor listed on the NASDAQ, with a presence
in over 40 countries and annual revenue of more than Orion Health is a founding partner in the Precision Driven
US$12.4b. Its technology solutions touch over half of the Health research programme, along with Waitemata
U.S.’s insured population and reach more than 260,000 District Health Board and the University of Auckland,
healthcare providers. with support from the Ministry of Business Innovation and
Employment. It is intended that a combined $38m will be
The opportunities in partnering with Cognizant are invested in the programme over seven years in the new
immense. Most notably the company’s software area of precision medicine. The results of the research
manages health insurance claims and administration for will feed directly into Orion Health’s product roadmap and
190m people, and it has a very large, dedicated sales contribute to existing products such as Orion Health’s
force that is now offering the Amadeus precision medicine Amadeus platform.
platform alongside Cognizant's own technology. As
evidence of this, Cognizant has just secured the first sale
under this partnership to a healthcare insurer with over
3m members.
12 2016 Annual Report / Chairman and CEO Report
Recognition Our opportunity

We continue to be recognised by respected healthcare There is a massive market opportunity in global
and technology organisations around the world. Orion healthcare for forward thinking software companies
Health was named Technology Provider of the Year at such as Orion Health.
the 2015 United Kingdom Health Investor Awards, in
recognition of our ground-breaking partnerships that In five years’ time patient records will exist in the cloud.
deliver better healthcare services. Our strategy is aimed at having the technology to support
this eventuality in every significant healthcare economy in
the world. Today our software manages over 100m PHRs
There is a massive around the globe, which provides an excellent foundation
on which to innovate.
market opportunity in
The Amadeus precision medicine platform has been
global healthcare for
launched and is being deployed. This platform will allow
us to store more data types, enable cognitive support and
forward-thinking software
build new and innovative functionality.
companies such as
In closing, we would like to thank you, our shareholders,
Orion Health. for your commitment and support. We are delighted
to have you with us on this exciting journey towards
revolutionising healthcare, so that every individual
Leading global researchers have also recognised Orion receives the perfect care for them. At Orion Health
Health’s technology leadership. IDC named Orion Health we think about this vision everyday. It’s at the heart of
as one of just seven organisations in its major study of US everything we do.
Health Information Exchange Platform Solutions, and we
were awarded the 2015 Frost & Sullivan New Zealand
Healthcare IT Company of the Year.
Our people
We are very proud of the expertise, knowledge and
passion exhibited daily by the people who work at
Orion Health.
We continue to attract world-class talent, while at the
same time retaining capable and experienced leaders. Andrew Ferrier
Chairman
In 2016 we welcomed a new Executive Vice President
for EMEA, Jonathan Selby – a highly regarded industry
executive who was responsible for leading InterSystems’
growth in the United Kingdom between 2010 and 2014.
Jonathan filled the role vacated by Wayne Oxenham who
has become the President of our North American division.
Wayne joined Orion Health in 2003 and has also held
roles in Implementation Services, Sales, Marketing and
Research and Development.
We also appointed Dhaya Sivakumar, previously CIO at
Paymark in New Zealand, as Vice President of Integration.
Ian McCrae
Dhaya’s extensive experience in commercialising API-
Director and Chief Executive Officer
based services and building ecosystems that enable
innovation will help shape Amadeus into the leading
platform for the delivery of precision medicine. 23 May 2016