All figures in NZD
AUCKLAND, New Zealand – 3 July 2018 – Orion Health Group Limited (NZX:OHE/ASX:OHE, “Orion Health” or the “Group”) today announces that it has reached agreement in relation to Orion Health’s Rhapsody and Population Health businesses with private equity technology investor Hg (“the Hg Transaction”).In April 2017, the Group announced a strategic review focused on long-term shareholder value, including the evaluation of any partnerships or minority investments to allow Orion Health to achieve its potential.
The conclusion of this lengthy and comprehensive review has recognised that the Group’s three businesses would each benefit from different funding, investment backing and partnerships and that it was in the best interests of the Group and its shareholders to consider options individual to each business. The Group has been working with Hg for a number of months and has now concluded an agreement which the Board is pleased to set out below.
• The agreement is for entities managed by Hg to acquire majority ownership of Orion Health’s Rhapsody business (“Rhapsody”) and to invest in Orion Health’s Population Health business (“Population Health”).
• Hg is a specialist technology investor committed to helping build global businesses with funds of c.£10 billion under management.
• The Hg Transaction implies a $255 million enterprise value of Orion Health.
• Following completion of the Hg Transaction, Orion Health will undertake a share buyback offer at an estimated price range of $1.24-$1.29 per share (the “share buyback offer”), with the final offer price dependent on Orion Health’s available cash immediately following completion taking into account transaction costs and working capital adjustments in relation to the Rhapsody transaction. Shareholders will have the option to accept the share buyback offer in respect of all or a specified proportion of their Orion Health shares.
• The bottom of the estimated buy back price range represents a premium of 46% to the closing price per Orion Health share of $0.85 on 2 July 2018 and 55% to the volume weighted average trading price over the last 20 trading days.
• The Hg Transaction is subject to a number of conditions, including approval of the Hg Transaction and the share buyback offer by Orion Health’s shareholders. A notice of meeting describing the Hg Transaction and the share buyback offer will be circulated to shareholders. The independent directors have commissioned an independent report from KordaMentha in respect of the Hg Transaction and the share buyback offer, which will be provided to shareholders with the notice of meeting.
Next Chapter for Orion Health
“This investment provides Orion Health with a tremendous opportunity to deliver on our vision for customers, our people and for the healthcare sector,” said Ian McCrae, Founder and CEO, Orion Health. “We received strong interest in Orion Health’s business throughout the strategic review process and the Board and I believe that Hg is the right partner to accelerate the expansion of Rhapsody and support our vision for Population Health.”
Healthcare technology is a core investment area for Hg, having recently completed a number of transactions across the sector. This investment will be made from Hg’s Mercury 2 Fund.
“Hg has been researching the theme of interoperability and population health management in healthcare IT over many years,” said David Issott, Partner, Hg. “We believe this is a key global growth theme backed by substantial market funding and resources. Rhapsody provides fantastic products and services for this market and we look forward to partnering with the team at Rhapsody to maximise its potential across the globe. We are also excited to work with Ian and the team to realise the full potential of the Population Health business.”
Orion Health built the first Rhapsody integration engine in the late-1990s quickly becoming one of the most recognised interoperability platforms for healthcare organisations today. The combination of Rhapsody’s global team and Hg’s resources will extend Rhapsody as a leader in the interoperability platform space, building on both Rhapsody’s world class technology and highly rated customer service.
Philippe Houssiau, an experienced global technology executive, will step in to lead the Rhapsody business and will join the new board of Population Health from closing. Philippe has broad experience in leading healthcare businesses, consulting and start-ups, and is formerly CEO of Agfa Healthcare, CEO of Alliance Medical and a Senior Partner with PwC.
“As the healthcare sector evolves, so too has Orion Health. We recently restructured our teams into three businesses focused on Rhapsody, Population Health and Hospitals, repositioning Orion Health around market potential and focusing dedicated teams to support customers, improve operating performance and drive growth,” said McCrae. “We remain committed to the ongoing success of Rhapsody and supporting customers across our entire Orion Health business.”
Orion Health believes the biggest advances in healthcare technology will come from advanced analytics and better dataflow to address critical issues within the sector. In the face of growing and aging populations and the rise of chronic diseases, health systems the world over are under enormous strain. The focus of Orion Health’s Population Health and Hospitals business is to help the sector optimise healthcare budgets and address the transformation necessary in the healthcare industry.
“This injection of capital will advance Orion Health’s businesses to reach their full potential over time. For our Population Health business, it will help strengthen our position as a market leader, and for our Hospitals business, it will further support its growth,” said McCrae.
For more details: https://www.nzx.com/announcements/320296