Telstra buys Orion Health stake

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TELSTRA Health has bought two per cent of Orion Health Group in the healthcare management software developer’s bookbuild in the lead-up to its listing later this month.

THE unit of Australia’s largest telecommunications business Telstra Corp spent $NZ20 million ($A18.62 million) buying 3.5 million shares at $NZ5.70 a piece in last week’s bookbuild which valued the company at $NZ915 million, Orion said.

Orion is selling 21.1 million new shares to raise $NZ120 million in new capital in the float. Existing shareholders are estimated to keep around 86.3 per cent of Orion after the float, with chief executive and founder Ian McCrae holding around 50 per cent. Orion will use the new funds to double the existing 40 research and development teams to accelerate its existing solutions and to undertake blue sky research on its big data analytics and predictive modelling software. “Telstra Health clearly understands the looming health data revolution driven by the huge expansion in health related data generated by mobile devices and applications,” Mr McCrae said. Telstra launched its health unit in 2013, before separating it out as a standalone business this October. The Telstra business links patients with medical records, doctors and health services and uses its network to transfer data and provide tele or video conferencing, particularly to the elderly or those in remote area. Orion didn’t provide earnings forecast in its prospectus because of the “lumpy” nature of the group’s revenues for fear of misleading investors. Orion had an annualised growth rate of 26 per cent over the past 10 years, according to its offer documents. It posted a loss of $NZ14.8 million in the six months ended September 30 on sales of $NZ80.5 million. Telstra Health joins 20 institutional investors who bought into the company during its initial public offer. It will debut in a dual-listing on the NZX and ASX on November 26.