FY2015 Annual Report FY2015 Annual Report Download

100 Pages·2015·2.94 MB·English

Thinking Software For Life
ANNUAL REPORT 2015
Orion Health 26 . 05 . 2015
2015 Annual Report
02
Orion Health
2015 Annual Report
03
CONTENTS
Key industry terms and definitions 04
Section 1: Orion Health at a Glance 05
Section 2: FY2015 Business Milestones 06
Section 3: Letter from the Chairman and CEO 10
Section 4: Orion Health Strategy and Business Model 15
Section 5: Overview of FY2015 Financial Performance 25
Section 6: Board of Directors 38
Section 7: Global Leaders 40
Section 8: Directors’ Responsibility Statement 42
Section 9: Independent Auditors’ Report 43
Section 10: Financial Statements 45
Section 11: Notes to the Financial Statements 50
Section 12: Corporate Governance 82
Section 13: Shareholder Information 89
Section 14: Directory 99
Orion Health 26 . 05 . 2015 Key industry terms
and definitions
2015 Annual Report
4
Key industry terms and definitions
Accountable Care Organisations. Groups of United States Health Providers contracted by the United States federal
ACOs government to improve care coordination for a patient population, with their reimbursement tied to quality metrics and
reductions in the total cost of care for an assigned population.
Annualised Recurring Revenue. This represents Managed Services Revenue and Support Revenue for the month of March,
ARR
adjusted for any abnormal items, multiplied by 12 to express an annualised figure.
Fee For Service. A funding model prevalent in healthcare where Providers are paid for the services they provide, not for the
FFS
outcomes they achieve.
Those that provide healthcare funding for a given geographical area or population group. Funders include Governments
Funders
and Payers.
Governments Encompasses national, federal, state and regional healthcare bodies as well as regional health boards and regulatory bodies.
HCIT The Healthcare information technology industry.
Health Information Exchange. The term can refer to the technology or an organisation using the technology. The technology
HIE enables aggregation and secure exchange of electronic clinical information between a combination of Providers, Payers,
Governments and ACOs. Outside the United States, these are commonly referred to as an Electronic Health Record (EHR).
NHS National Health Service. Government funded public health bodies in the United Kingdom.
Payers Health insurance companies.
Population Health Management is the concept of using HCIT to unify health data so that health professionals can deliver
PHM
more effective, precise healthcare, keeping people healthier and out of the health system.
Providers Public and private parties that provide healthcare services, e.g. hospital networks, GPs and specialists.
SaaS Software as a Service. A method of software delivery.
Orion Health Section 01 Orion Health at a Glance
2015 Annual Report
05
Orion Health at a glance
Healthcare Providers
Hospitals, public health
including public and private
organisations, pharmaceutical Healthcare Providers, Payers
hospitals, hospital networks,
Target Customers companies, software and (insurers), Governments,
integrated delivery networks,
hardware vendors, ACOs, HIEs, Pharmaceuticals
multi-facility healthcare
research bodies
organisations
Go-to-market
Solution Group
INTELLIGENT SMARTER HEALTHIER
INTEGRATION HOSPITALS POPULATIONS
OPEN PLATFORM
ENTERPRISE
ANALYTICS
Key Software RHAPSODY CONSULT
COORDINATE
MEDICINES
ENGAGE
The solutions in this group are
The solutions in this group
utilised by Funders and Providers
The solutions in this group are connect all clinical information
to connect, consolidate and
used to rapidly and reliably into a single view within a Provider
structure healthcare information
connect, integrate and share setting, as well as automate key
What They Achieve from multiple sources, making it
information between disparate processes, improve efficiency
available across a geographical
health software systems, users and increase patient safety via
region and enabling care
and organisations a robust end to end information
coordination, actionable insights
system
and consumer engagement
FY2015 Operating $39M $44M $81M
Revenue
Product
Auckland, Christchurch, Arizona, Bangkok, Canberra
Development Centres
Group Wide Functions Corporate, Marketing, People & Transformation, Executive Office
Regional Functions Sales & Marketing, Implementation Services, Managed Services, Support Services
Orion Health 26 . 05 . 2015 Section 02 FY2015 Business Milestones
2015 Annual Report
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SECTION
2: FY2015
Business Milestones
MAY 2014
Named NZ Hi-Tech Company of the Year and Exporter of the Year (over $5m)
JUNE 2014
$25.5m of new equity raised via over-subscribed placement to existing eligible shareholders
Orion Health starts work on implementing its Clinical Portal across the Midlands region of New Zealand
Agreement reached with HealtheNet (New South Wales government) for Orion Health to deploy its
Healthier Populations solution to connect clinicians across the state to a complete patient record
JULY 2014
Graeme Wilson appointed as Chief Operating Officer
Agreement reached with Blue Shield of California, forming the foundation for Cal INDEX
AUGUST 2014
Dr Lester Levy joins the Board
SEPTEMBER 2014
Andrew Clements steps down as Chairman of the Board after 12 years. Andrew Ferrier is elected
as new Chairman
OCTOBER 2014 2014
Launch of Orion Health’s $125m Initial Public Offering
Orion Health Section 02 FY2015 Business Milestones
2015 Annual Report
07
NOVEMBER 2014
2: FY2015
Orion Health shares commence trading on the NZX Main Board and the ASX
Orion Health selected to provide Smarter Hospitals solutions for Sheffield Teaching Hospitals
Business Milestones
NHS Trust in the United Kingdom
Health and Social Care Northern Ireland wins prestigious Health Service Journal award for “Enhancing
Care by Sharing Data and Information” for its Electronic Care Record, powered by Orion Health
DECEMBER 2014
Orion Health successfully completes the first phase of implementation of its Open Platform
for Cal INDEX and the solution goes ‘live’
Orion Health is named #1 vendor in Clinician Network Management by Chilmark Research
JANUARY 2015
Successful go ‘live’ of Orion Health’s first Smarter Hospitals ENTERPRISE implementation in
the Philippines market
Work starts on Orion Health’s largest ever Canadian project, the implementation of our Healthier
Populations solutions for a large province in Canada
FEBRUARY 2015
Commercial agreement reached with all five South Island District Health Boards for a single
South Island-wide shared patient information care system
Orion Health’s Scottsdale Center of Excellence officially opened by local Mayor, W J ‘Jim’ Lane
MARCH 2015 2015
Major sale of Open Platform to a United States Provider, a large clinically integrated network
of physicians and hospitals in Tennessee and surrounding states
Orion Health’s work with Lewisham Healthcare NHS Trust is extended to encompass Greenwich
NHS Foundation Trust in a project that will help support the merging of these two organisations
in South East London
Orion Health 26 . 05 . 2015 Section 02 FY2015 Business Milestones
2015 Annual Report
08
TOTAL OPERATING REVENUE NZ$m
200
164
4 year CAGR = 21% 153
150
110
100 97
78
50
0
FY2011 FY2012 FY2013 FY2014 FY2015
ANNUALISED RECURRING REVENUE NZ$m
70
63
4 year CAGR = 40%
60
+42%
50 44
+43%
40
31
30
+13% +76%
20 16 18
10
0
31 March 31 March 31 March 31 March 31 March
2011 2012 2013 2014 2015
R&D INVESTMENT NZ$m
30%
60 30%
25%
50 24% 25%
21% 22% 49
40 20%
34
30 27 15%
24
20 16 10%
10 5%
0 0
FY2011 FY2012 FY2013 FY2014 FY2015
R&D Expense R&D Expense as % of Operating Revenue
Orion Health Section 02 FY2015 Business Milestones
2015 Annual Report
09
OPERATING REVENUE BY SOLUTION GROUP
24%
23%
FY2015 FY2014
49% 56%
21%
27%
Intelligent Integration Smarter Hospitals Healthier Populations
FY2015 NZ$m 39 44 81
FY2014 NZ$m 35 33 85
Note: above excludes non-solution group operating revenue
OPERATING REVENUE BY REGION
23%
21%
FY2015 FY2014
13%
66%
19% 58%
North America UK, Ireland, EMEA Asia Pacific
FY2015 NZ$m 95 30 38
FY2014 NZ$m 101 20 32
Note: above excludes Corp/Dev group operating revenue
Orion Health 26 . 05 . 2015 Section 03 Letter from the Chairman
and CEO
2015 Annual Report
010
SSEECCTTIIOONN
3: Letter from the
Chairman and CEO
Dear Shareholder Total FY2015 Loss before Income Tax was $51m, a direct result from
our increased investment in new product development as well as
Orion Health and the global healthcare IT industry are undergoing
building our service delivery capacity. The Loss after Tax for the year
fundamental change, resulting in both huge opportunity and
was $61m and reflects the removal of $7m of deferred tax assets from
uncertainty. FY2015 has been a challenging one for Orion Health in
our Balance Sheet.
many respects, but also one where several strategic milestones have
been achieved. During FY2015 we grew our R&D group from 363 people to 461
people, bringing our total R&D spend to $49m for the year. This
During the year we successfully completed a $125m Initial Public
provided us with the impetus to increase our development efforts
Offering (IPO) of Orion Health shares and commenced trading on the
across all of our solution groups. In particular we delivered new
New Zealand Stock Exchange and the Australian Stock Exchange. With
generation solutions in our Healthier Populations group in order to meet
this significant milestone behind us and with the additional funding, the
the expectations of our customers and progress our vision for PHM.
Board is focused on supporting the executive leadership team to deliver
Orion Health’s growth strategy. The health information technology market is estimated to be worth
US $57 billion by 2017. Globally we are seeing a move towards PHM
We have continued to evolve the structure of our business to support
solutions and we believe Orion Health is the only vendor taking a
the shift to a subscription revenue model with a global delivery platform,
scalable, whole of platform approach to market. We are very excited
and this is starting to reap benefits. We have grown our Annualised
about the significant and wide ranging opportunities that are emerging
Recurring Revenue base significantly, from $44m at 31 March 2014
in this space.
to $63m at 31 March 2015, an increase of 42%. An important
contributor to this growth was the successful implementation of Orion Building on our momentum and taking advantage of the opportunity
Health Open Platform for our first large strategic Health Insurance ahead of us requires strong focus and leadership. Orion Health has
(Payer) customer in the United States, Cal INDEX. grown from a company of fewer than 450 people to one of 1,226 in
just over four years. With such fast growth comes a need to continually
Total FY2015 Operating Revenue was $164m, up 7% from $153m
develop leadership at all levels in the business. The Board was delighted
in FY2014, and driven by our United Kingdom and New Zealand
to welcome leadership expert Dr. Lester Levy as a Director in August
businesses. Both of these regions were standout performers, delivering
2014. The Board was also very pleased with the appointments of
60% and 23% revenue growth in FY2015 respectively.
Graeme Wilson as Chief Operating Officer and Gary White as Global
All other regions experienced growth in FY2015 except for North Services Leader during 2014.
America, where revenue growth was impacted by two factors;
Graeme’s appointment has allowed our Chief Executive Officer,
Firstly, the US market is in transition to Population Health Management Ian McCrae, to increase his focus on product leadership and
(PHM), under the evolving Obamacare regulatory framework which innovation, whilst Gary’s appointment furthers our ongoing focus
is driving the market from a fee for service model to value based to improve our Implementation Services and Managed Services
outcomes. We have witnessed the recent tapering-off of some execution capability. Both of these areas are strategic priorities for
government incentive programmes and the introduction of others. We our business as they directly influence product quality, customer
also identified the early ascendancy of the Health Insurers, or Payers, satisfaction and financial performance.
as a key target market for Orion Health and we have been successful
Orion Health remains on a journey. The company is a recognised
securing contracts with 3 market-leading organisations. This rapidly
leader in its field with over 23 years experience across many different
changing US environment, did cause some slowing in contracting
health markets. We are well positioned to capitalise on the evolving
activity in the latter part of the financial year although recent activity
landscape in Health IT and we are committed to delivering on this
is encouraging. Continued volatility in closing contracts is expected
promise of growth. On behalf of the Board and management team,
to remain for some time as the market continues to transition to PHM
we want to assure our shareholders that we have the right people in
solutions. Market transitions driven by new regulatory change are
place and the necessary resources to execute our strategy and deliver
generally uncertain in timing but will create significant opportunities for
shareholder value.
Orion Health, as our solutions are well suited to evolving requirements.
Thank you for your support and we look forward to continuing on the
Secondly, our business model is in transition from perpetual licences
Orion Health journey with our shareholders.
to subscription revenue. These factors contributed in our U.S.
Healthier Populations group, to an 81% drop in revenue derived from Yours sincerely
perpetual licences for the year, only partially offset by a 35% rise in
managed services revenue as newly acquired customers completed
implementations and moved to a live production state. The transition to
subscription revenue in our US PHM business is now largely complete
and we look forward to building on our recurring revenue base with new
contracting success.
Andrew Ferrier Ian McCrae
Chairman Chief Executive Officer